Oral Answers to Questions

OFFICE OF THE DEPUTY PRIME MINISTER

The Deputy Prime Minister was asked—

Teesport (Expansion)

Vera Baird: What assessment he has made of the effects on regeneration in the Tees valley of port expansion at Teesport.

Jim Fitzpatrick: Mr. Speaker, as you know, my right hon. Friend the Deputy Prime Minister is unable to be present at Deputy Prime Minister questions today, as he will be representing my right hon. Friend the Prime Minister at Prime Minister's questions. [Interruption.] I am sure that my right hon. Friend the Deputy Prime Minister will be pleased to hear the welcome that he receives even before he arrives in the Chamber.
	I can tell my hon. and learned Friend the Member for Redcar (Vera Baird) that the northern way action plan launched in Gateshead on 20 June sets out clearly the wider economic benefits that would flow from the development of the facilities at Teesport—for the Tees valley, the north and the UK as a whole.

Vera Baird: I thank my hon. Friend for that answer. The project is indeed a big one, capable of generating around 7,000 jobs in a sub-region where unemployment is still twice the national average. Is he aware that similar applications for port expansion at Felixtowe, Harwich and London could have a major impact on the viability of Teesport's proposals? Will he confirm that our interests will be part of the context in which those applications are considered? Will he do his level best to help us to help ourselves to get a thriving deep-water container port at Teesport, and a huge economic boost for the Tees valley?

Jim Fitzpatrick: I hope that my hon. and learned Friend and the House will understand that I cannot pre-empt or comment on specific planning proposals. However, I am confident that Teesport has a strong future supporting international trade and regional regeneration. I note that the urban regeneration company Tees Valley Regeneration has a successful track record, having spearheaded the creation of more than 12,000 jobs and inward investment of over £500 million over the past eight years. I note too that she and other colleagues are expecting to meet my hon. Friend the Minister of State, Department for Transport later this month. I am sure that they will continue to press the case for Teesport as effectively as they have done already.

Dari Taylor: There remains an output gap of £29 billion between the north and the rest of the UK. The south-east economy is considered to be overheating, so does my hon. Friend agree that the development of a deep-sea container port at Teesport would be an important step towards closing the north-south divide?

Jim Fitzpatrick: The forthcoming review of ports policy by my right hon. Friend the Secretary of State for Transport will address the key questions relating to port capacity and future port development, and the wider issues. They include environmental factors, local regeneration, productivity and the role of ports in our overall transport strategy.

Public Conveniences

Vincent Cable: What role his Department plays in encouraging local councils to provide a sufficient quantity and quality of public conveniences.

Phil Woolas: The provision and maintenance of toilets in public places is at the discretion of local authorities. There are many examples of good practice, such as the pioneering community toilet scheme in the London borough of Richmond upon Thames, which the hon. Gentleman will know. In due course, I will be inviting the British Toilet Association to meet me to discuss methods of spreading such good practice.

Vincent Cable: I thank the Minister for that excellent reply. He has acknowledged that this is one of the few areas over which local councils have complete discretion. Many are using that discretion to close public conveniences. What further action would he recommend to safeguard the interests of elderly and disabled people, in particular, and to preserve public hygiene in major town centres such as mine? Those centres have large numbers of visitors, many of whom are large consumers of alcohol.

Phil Woolas: I thought that we were to be treated to a Liberal Democrat policy of spend-a-penny on income tax, as the hon. Gentleman's normal solution to problems is to raise taxes. However, there is a serious point behind the question, and I thank him for raising it. As I said in my reply, I do not want to impose further burdens on local government, although I acknowledge the role that it plays. I have invited the BTA to meet me to discuss how we may move this important agenda forward.

Peter Viggers: Is the Minister aware that, perhaps because most architects are men, toilets provided for men and women tend to be about the same size, even though women's needs are greater? Research by Cornell university has shown that the average man spends 45 seconds in a convenience, and the average woman 80 seconds. Does he agree that it is a scandal that insufficient provision is made for women? [Interruption.] I see that some Labour Back Benchers behind the Minister are laughing. Does he accept that they should realise that it is not a joke for the thousands of women who have to queue every year for the loo?

Phil Woolas: Well, I was not aware of the facts that the hon. Gentleman has brought to our attention. I am also conscious of the likely presence of sketch writers in the Gallery, but I take the point that the hon. Gentleman makes seriously. The provision of public toilets by local authorities and others is an important local public service. Many local authorities take a good approach to that issue and it is a matter that the public take very seriously.

Affordable Housing

Mark Harper: If he will make a statement on the Government's policy on the provision of affordable housing in rural areas.

Yvette Cooper: The Housing Corporation is currently funding 4,000 new, affordable homes over two years in villages of fewer than 3,000 people. The Government are setting up a new, affordable rural housing commission to look further at that, as set out in our manifesto.

Mark Harper: The Forest of Dean district local plan is currently on the Deputy Prime Minister's desk awaiting approval. Is the Minister aware that the district's housing strategy is based on flawed assumptions, as three quarters of the affordable housing plan is actually for people not currently living in the district?

Yvette Cooper: The hon. Gentleman will know that I am not able to comment on matters that are passing through the planning system and on which Ministers will have to make a decision. Clearly, every area needs to address the issues of affordability and the problems in the housing market at the moment. It is simply not consistent for Opposition Members to complain about affordability and then oppose the building of the new homes that this nation badly needs.

David Kidney: The Government have commendable plans to try to make home ownership affordable for first-time buyers by variance of the current home-buy scheme, but has my hon. Friend picked up—as I have—some concerns from housing associations that the models indicated in a recent consultation paper may not be affordable in every situation? I am especially worried about rural areas, such as Stafford, if that is the case. Can my hon. Friend assure me that she is aware of the problem and that it will be corrected in the final scheme?

Yvette Cooper: We have been consulting on proposals for social home-buy options, and we will certainly take very seriously all the points that are made throughout the consultation. Regional differences will occur and rural areas will face different issues to urban areas. That is why we have said that there will be additional safeguards, similar to those that exist for the right-to-buy scheme in rural areas, for the social home-buy scheme.

William McCrea: Will the Minister accept that affordable housing in rural areas is a problem across the whole of the United Kingdom? Therefore, will she encourage the Secretary of State to deal with that problem directly in Northern Ireland?

Yvette Cooper: The hon. Gentleman will know that I cannot answer for issues that are a matter for the Northern Ireland Office, but we recognise that the pressures in the housing market affect the whole country. That is why we have set out our proposals in the sustainable communities plan, which covers England. We will also respond to the Barker review, because we take the problem very seriously.

Chris McCafferty: Will my hon. Friend the Minister look carefully at the particular problems in rural honeypots, such as Hebden Bridge in my constituency? It has received wonderful accolades, such as the fourth funkiest town on the planet and the best high street for local shops in the UK—

David Taylor: Cannabis allotments!

Chris McCafferty: It is certainly a centre for alternative lifestyles. All those aspects conspire to make Hebden Bridge a highly desirable place to live for people from all over the UK. Can my hon. Friend the Minister look carefully at the problems of affordable housing for local people in such places?

Yvette Cooper: My hon. Friend makes an important point and we are setting up the rural affordable housing commission to consider exactly such problems. She is also right that the increased economic prosperity and investment that we have seen has had consequences for the housing market. We should recognise that we have 1 million more homeowners since 1997, as a result of the changes that were made with regard to the Bank of England, economic stability and economic growth, but we also want to support a new generation of first-time buyers. That is why we are considering those measures now.

Robert Syms: As there are 380,000 people on waiting lists for affordable housing and the Council of Mortgage Lenders says that fewer first-time buyers are entering the market than at any time in the last 20 years, there is no doubt that there is a major affordable housing crisis, especially in rural areas. What further measures can the Minister list to give confidence that a Labour third term will be any different from the failures of the last eight years?

Yvette Cooper: Let us make clear the further steps that we want to take. We are putting extra investment into social housing, so there will be a 50 per cent. increase in social housing over the next few years, and we have set out proposals in the sustainable communities plan to build more homes. The hon. Gentleman must recognise that many of the current pressures on our housing market are because in the past 30 years there has been a substantial drop in housing supply relative to housing demand, and his party have constantly opposed building the new homes that the nation needs. The message that his party is giving to first-time buyers is, "We don't want to help you and we don't want you round here". That is not a message that the Labour party is prepared to give.

David Taylor: Of the 7,500 houses that North West Leicestershire district council—a good housing authority—owned in 1979, about 3,000 were disposed of under right to buy and the remaining 4,500 are the subject of a coerced block transfer. Can the Minister tell us why those 4,500 residual tenants, who were broadly happy with their landlord's responsiveness and housing policies, are being forced down the stock transfer route?

Yvette Cooper: Nobody is forcing tenants in any direction at all. What we have done is to make additional investment available through other routes. We have given councils more money to invest, which is why there is a 13 per cent. increase in investment in their housing stock by councils; but we are also providing alternative options, because that 13 per cent. is not enough to deal with the £19 billion backlog in repairs and maintenance that we were left with by the previous Government, which meant that people were not able to live in decent homes for the 21st century.

Local Government

John Pugh: What plans the Government have further to extend unitary local government in England.

David Miliband: The Government have encouraged debate about the future of local government, and we have said that we believe that questions of organisation should follow those of function. We are following the debate with interest.

John Pugh: It is certainly horses for courses that there is no master plan. Should there be community support for another level of local government or unitary government, what would be the mechanics through which the process would proceed?

David Miliband: There are a range of issues, including consultation with the boundary commission and others. My understanding of the issue in the hon. Gentleman's constituency is that it was investigated by the Local Government Commission in the mid-1990s, and the commission recommended that we should not go ahead with a unitary scheme for Southport. In general of course, the Government cannot simply decide on their own; they have to consult a range of interested parties and that is the procedure that would have to be followed.

David Borrow: Will my right hon. Friend look seriously at the case for creating unitary authorities in Lancashire—

Gordon Prentice: Oh, no, no, no.

David Borrow: Particularly given the strong support from the majority of Lancashire MPs for unitary authorities. The long drawn-out process before we actually make a decision to move to unitary authorities is creating uncertainty and is destabilising local government in the county. A fairly quick decision one way or the other would be helpful to all of us.

David Miliband: My hon. Friend's question shows both the potential advantages as well as some of the pitfalls associated with that issue. I can certainly assure him that we will give it careful consideration before making any moves.

Jacqui Lait: I believe that it is only courteous to the House to declare that I have an interest in this matter as my husband is the leader of a county council—[Hon. Members: "Ooh."]—and an exceedingly good one, a Conservative-controlled county council that has improved by leaps and bounds since we beat the Liberal-Labour pact that used to run it.
	However, as is palpably clear from the Minister's answers, he agrees with the Deputy Prime Minister's statement in January that the position is to have unitary authorities. Despite the discussion between Members from Lancashire, could the Minister indicate whether, given the number of powers already, or about to be, transferred by the Government to unelected and very unpopular regional assemblies, he already has in place astealth plan to abolish England's historic local government boundaries?

David Miliband: I can certainly assure the hon. Lady not only that I make it a point to agree with what the Deputy Prime Minister says, but that there is no stealth plan for the sort of abolition that she describes. On Monday, the Minister for Local Government, my hon. Friend the Member for Oldham, East and Saddleworth (Mr. Woolas) described the hon. Lady's colleague as the "Member for Scaremongering, South." I think that we have got a bit more of that today.

Social Housing

Adrian Bailey: What steps he is taking to improve the stock of social housing.

Jeremy Corbyn: What plans he has to increase the supply of council housing.

Yvette Cooper: The Government are taking steps to improve both the condition and supply of social housing. Since 1997, we have halved the number of homes failing the decency standard, with a capital investment of £21 billion, and we have doubled the budget for new social housing to increase building rates over the next few years.

Adrian Bailey: I thank the Minister for her reply. Certainly, the social housing stock in my local authority has improved enormously as a result of the investment. However, rising house prices mean that an increasing number of young people on low incomes are still unable to gain access to either the social or private housing market. How is she working with local authorities on schemes, such as social home buy, to ensure that everyone has the opportunity to have a house at an affordable cost?

Yvette Cooper: My hon. Friend is right: a lot of people want to buy either their own homes or a share in them, but they currently cannot afford to do so. That is why we set out proposals to help more than 100,000 more first-time buyers and key workers into shared equity schemes or into buying a share of their own homes. We are considering that further and we want those kinds of measures to be picked up across the country; but we must recognise that, if we are to address the pressures in the housing market, we also need to build more homes—something that the Conservative party has consistently and repeatedly opposed.

Jeremy Corbyn: Is the Minister aware that more than 250,000 people are on London borough councils' waiting lists and that, at the current rate of supply of new housing association properties, very few of those people have any chance whatsoever of being rehoused? The only way forward is for the councils to resume building houses for rent for people in housing need. Will she consider ring-fencing the capital budgets to ensure that they are used not just for improvements, but for new build to meet the desperate housing need of people who have no chance of ever buying a property in London?

Yvette Cooper: My hon. Friend is right to suggest that it is not simply a matter of improving the existing housing stock, but he will agree that desperately needed, substantial improvements to the quality of homes have been made. However, he is right to suggest that there is also an additional need: we need to build new social housing. That is why we are increasing the budget over the next few years. We also need to consider other ways to bring investment into social housing—for example, through section 106 of the Town and Country Planning Act 1990, and other work with English Partnerships—but he is also right to point out that London is an area of particular pressure. That is why we need to build new private market homes and new social homes as well, and that is what we are committed to doing.

Daniel Kawczynski: The Government have set a target of building 500 affordable homes in my constituency, yet in April 2003, the local authority social housing grant, which was worth £1.85 million, was taken away. Will the Minister please tell me how she expects Shrewsbury borough council to provide 500 affordable homes when that crucial grant has been taken away?

Yvette Cooper: The hon. Gentleman has asked a series of questions about that, and he has perhaps misunderstood the way in which the housing finance mechanism works. More investment is going into affordable housing through the Housing Corporation and increasingly through the regional housing budgets, on which we will make an announcement shortly. So increased investment is available for new affordable housing. He is certainly right to suggest that we need to go further, and that is what we are doing over the next few years.

Alistair Burt: Yesterday, the Secretary of State for Work and Pensions highlighted the growing opportunities gap for children who live in rented, rather than owner-occupied, social housing. He called on his own Government to do more to spring the trap. So as well as improving social housing stock—the Minister might have saved for social housing the fine terraces in Liverpool, rather than knocking them all down and sending people down to London—why is she not today announcing an urgent change of policy to accelerate the social home buy scheme or to extend the right of housing association tenants to buy their own homes? Who is right—the Minister or the Secretary of State?

Yvette Cooper: That was a rather confused question, which shows that the hon. Gentleman has not remotely looked at the programme in Liverpool, which addresses problems of serious low demand as well as the pressures of high demand, issues that his Government ignored completely for many years. It is certainly the case that we want to provide council and social housing tenants with opportunities to be able to afford a share in their own home. Again, that is something that the previous Government did not look at. We want to act in a way that supports expanding social housing and not in a way that is at the expense of it and undermines it, which is the approach that his party took for many years.

Brian Iddon: According to Government-funded research carried out by the Building Research Establishment, the management and maintenance allowances are not adequate to keep council homes up to a decent standard. Will my hon. Friend therefore consider increasing the management and maintenance allowances above the current rate of 6 per cent. in order to bridge that gap?

Yvette Cooper: As my hon. Friend may be aware, we have already increased the amount of investment going in through management and maintenance allowances to both council and social housing. There has been a 13 per cent. real increase since 1997. That, on its own, is not enough to address the backlog, and that is exactly why we have seen the extra investment of £21 billion going into social housing. The investment goes into very practical things; it is about giving people new windows and proper central heating and making sure that we have the modern standards in our social housing to which tenants should be entitled.

Empty Housing

Si�n James: What research the Department has commissioned on making more effective use of empty housing.

Jim Fitzpatrick: The Office of the Deputy Prime Minister in 2003 published, as a result of extensive research, both a guidance booklet and an implementation handbook entitled Empty Property: unlocking the potentiala case for action. I commend them both to my hon. Friend and the House.

Si�n James: I thank my hon. Friend for his answer, but does he recognise that there should be more focus and resources provided by the Government to make better use of empty housing stock, such as in my constituency? Shelter feels that this is needed to alleviate the negative effects of homelessness and housing need.

Jim Fitzpatrick: My hon. Friend is right. Empty homes are not just a waste, but are a target for antisocial behaviour. The Office of the Deputy Prime Minister is assisting local authorities to try to deal with this problem. She may know that we will be consulting shortly on secondary-legislation issues around the empty dwelling management orders and hope to see them introduced later this year. She will also be aware that we have introduced fiscal incentives and penalties to try to help with the situation.

Simon Hughes: Given that last year, we had nearly 700,000 empty homes in England and nearly 100,000 in London, could the Government learn the lessons and apply the urgency, enthusiasm and focus that we have had in our brilliant Olympic bid to reduce the number of empty homes? If so, could the Government follow the Select Committee recommendation of an annual report and recommendations and the urban taskforce recommendation of equalising VAT on new build and restoration?

Jim Fitzpatrick: I listened carefully to the suggestions that the hon. Gentleman made in respect of the statistics that he quoted. Last year, there were 700,000 empty homes in England, but that figure was below 600,000 in 2004. Considerable progress has been made. The Office of the Deputy Prime Minister and local authorities are concentrating on the 300,000 homes that have been empty for more than six months. We have reduced VAT on homes empty for more than three years, and we have zero rated it for renovations for homes empty for more than 10 years. We are trying to ensure that there are fiscal incentives for empty homes to be brought back into the letting sector.

Andrew Gwynne: My hon. Friend will be aware of the superb job being done by New East Manchester in tackling the empty housing problems there. What discussions is his Department having with neighbouring authorities, such as Tameside and Stockport councils, to ensure that the very real problems of market failure do not spread into the adjacent areas?

Jim Fitzpatrick: I am grateful to my hon. Friend for the information that he supplies about the good work being done locally. We are trying to work with all local authorities and I am sure that the subject of empty homes will be a feature of the local government conference, which starts today in Harrogate. We are also working with non-governmental agencies, such as the Empty Homes Agency, to try to make sure that we address the problem with the seriousness that it deserves. We will certainly look at the local authorities that he mentioned and make sure that they are getting the best possible advice from the Office of the Deputy Prime Minister.

Supporting People Budget

Tony Baldry: What representations he has received on the distribution formula for the supporting people budget; and if he will make a statement.

Phil Woolas: Some 117 responses were received following the first consultation paper on developing an allocation formula in 2001, 38 responses were received to the second consultation paper in 2002 and more than 50 responses were received following the publication of a briefing paper on the distribution formula last autumn.

Tony Baldry: Under the proposed distribution formula, Oxfordshire will lose more than 60 per cent. of its supporting people grant, which will hit some of the most vulnerable people, such as the chronically mentally ill who live in supported accommodation. It will affect support services in hostels for homeless people and support for people with learning disabilities. Why do the Government introduce a programme such as supporting people only then to turn round almost immediately and pull the rug away from us in Oxfordshire, thus dashing the hopes of many of the most vulnerable people who had hoped and expected to get an improvement in their lives?

Phil Woolas: I acknowledge the genuine constituency concerns that the hon. Gentleman raises. He has had meetings with my colleagues in the ODPM. I assure him that there are no plans whatsoever to reduce the budget in Oxfordshire by 60 per cent. or anything like that figure. Indeed, Lord Rooker has given assurances, with the inclusion of dampening in the formula, that no such thing could possibly happen.

PRIME MINISTER

The Prime Minister was asked

Engagements

Edward Leigh: If he will list his official engagements for Wednesday 6 July.

John Prescott: As the House knows, the Prime Minister is in Gleneagles, where he is hosting a very important G8 summit. The Prime Minister flew to Scotland directly from Singapore, where he has been helping to press London's case to host the 2012 Olympics. I understand that the votes of the International Olympic Committee ballot have been counted and that the result will be announced shortly. I congratulate everyone involved in the London 2012 team on getting through to the final round, as has just been announced, and putting together what is widely recognised as a superb bid.

Edward Leigh: Quite apart from the appalling effect on world poverty and fair trade of the common agricultural policy, has the Deputy Prime Minister had a chance to read the recent Public Accounts Committee report on fraud in the EU, which details why, for 10 consecutive years, the European Court of Auditors has been unable to sign off the EU's accounts because of corruption? Can we all in this House unite behind a campaign to sweep away the bureaucratic, corrupt and damaging CAP?

John Prescott: The hon. Gentleman makes a fair point about fraud and corruption. The President of the Commission recently announced that he intends to investigate those matters further and deal with them[Hon. Members: Oh!] Well, that must be the case. We cannot condone the situation, so we say that the problem must be dealt with.
	The Prime Minister's speeches about the CAP in Brussels and at the summit have had a considerable effect on our partners. There will be change and we intend to bring it about. We were not the ones who took us into the CAP, by the way.

Chris Ruane: What measures can be taken to ensure that the hundreds of thousands, if not millions, of UK citizens who are left off the electoral register can be put on it as soon as possible?

John Prescott: As my hon. Friend knows, a report by the Electoral Commission is being considered by the Department for Constitutional Affairs, which will report on it shortly. It is of great importance to all of us that the number of people who vote is maximised. Indeed, postal ballots increased the number of people voting by millions. While there has been a lot of criticism of them, I am bound to say that we must get a proper balance on such matters. They are without doubt one of the ways in which we can get more people voting in elections.

Michael Ancram: I join the Deputy Prime Minister in the tribute that he paid to our London bid teamwe all await the outcome of the vote with anticipation. We quite understand why the Prime Minister cannot be here today, and I am sure that the whole House will wish the G8 leaders success this week in addressing the problems of Africa and climate change. However, in his message this week to G8 leaders, the Zimbabwean Opposition leader, Morgan Tsvangirai, said:
	Zimbabwe is an albatross to all African leadership credibility and therefore we want to see a strong message that this regime has gone beyond what is acceptable behaviour of any government, and that it must be called to order.
	Will the Deputy Prime Minister join me in wholeheartedly endorsing that plea and agree that, as well as working to make poverty history, the G8 should be working to make tyranny history, too?

John Prescott: I welcome the right hon. and learned Gentleman to the first time since the election that Prime Minister's questions have been taken by the deputies. He will recall that I told him that the election would be on 5 May, something that he received with great hilarity. I also told him that we would win the election. We did. Handsomely. [Hon. Members: Oh!] Sixty-odd Members sounds a pretty good majority to me.
	We are all concerned about what is happening in Zimbabwe. The G8 will make its own comments. We must welcome the fact that the African Union has sent an envoy to Zimbabwe to make the points to it and to report back, as, I think, has the United Nations. The House has been calling for that, and the Prime Minister has made it clear from time to time. I hope that the right hon. and learned Gentleman welcomes that.

Michael Ancram: The Deputy Prime Minister's view of handsome and mine are obviously somewhat different. His party was elected to government on a 35 per cent. share of a 65 per cent. turnout of electorsthe lowest winning level in history. In England, his party got fewer votes than our party. If he had any respect for the British people, he would show a little humility.
	May I at least welcome the fact that the Deputy Prime Minister takes seriously the horrors and gravity of the human rights abuses in Zimbabwe? Why on earth then are this Government still trying, without due safeguards, to send Zimbabwean asylum seekers in fear of their lives back to the blood-stained hands of Mugabe and his thugs?

John Prescott: The right hon. and learned Gentleman is well aware that that is not the case. Each individual case is judged by the Home Secretary, as has been made clear in statements to the House. I do not accept the right hon. and learned Gentleman's interpretation.

Gordon Marsden: Will my right hon. Friend pass on the thanks of all the people of Blackpool to his colleagues in the Department for Environment, Food and Rural Affairs for the 62 million investment in modernising the sea wall to north pier that has just been announced? Does he agree that that money and the investment in the central corridor from EU and regional development agency funds, which is to be completed this weekend, show that Blackpool is on a strong course for regeneration, one that we hope will be joined in due course by a resort casino?

John Prescott: I agree that Blackpool needs a great deal of regeneration. [Laughter.] I think that is true. Anyone visiting Blackpool will know that to be the case. Indeed, we appointed an urban development body to do just that, and we hope to see much more development. As to whether we would consider a casino in Blackpool, my hon. Friend will know that in my job as Planning Minister I may have some influence on that decision under the new legislation, so I cannot comment.

Menzies Campbell: I add my congratulations to those responsible for the British bid. For what are now largely historical reasons, I have a particular interest in the outcome in Singapore. Like everyone else, I have my fingers crossed.
	The United Kingdom is now the second largest exporter of arms in the world. Since 1997, we have exported more than 2.5 billion-worth of arms to Africa. At Gleneagles, will the Government press G8 leaders, whose countries account for more than 80 per cent. of world arms sales, to sign up to the proposed international arms trade treaty, and to ensure that the export of arms neither fuels conflict nor contributes to the abuse of human rights in Africa?

John Prescott: The right hon. and learned Gentleman knows that we have been leading most of the argument in the EU. The question is a powerful one, and we have secured a great deal of agreement on it. We must achieve consensus on those matters within the European Union, and we are doing our best to do so.

Menzies Campbell: I am grateful to the Deputy Prime Minister for his positive response. He will know that, of all the crises on the African continent, the situation in Darfur is particularly grave. Disease, hunger and violence kill thousands every month. Does he agree that the African Union force is too small and its mandate too weak to have a decisive impact? Does not the situation now demand the swift deployment of an expanded and properly resourced African Union force with a new and unequivocal mandate to protect civilians and enforce peace? With four permanent members at Gleneagles, will the Government seek agreement to take that proposal to the Security Council?

John Prescott: When I entered the House in 1970, my first trip abroad was to the Sudan, where there was a civil war. People talk about the civil war in Sudan as if it started in the 1980s but in fact it had been raging well before then. There is a terrible tragedy in Sudan, but it is possible to identify Darfur with even worse atrocities. We are providing military and financial assistance and other help. Criticisms have been made of the African Union's involvement and whether it is adequate. That is being considered by the United Nations, and we will give whatever support we can.

Michael Jabez Foster: My right hon. Friend and his colleagues have done brilliantly in doubling overseas aid for the poorest in the world after many years of mean-spiritedness. However, does he agree that, as France is apparently spending more of its gross domestic product on aid and is closer to the 0.7 per cent. than we are, it is a matter of national honour that we do something at least to match that?

John Prescott: As my hon. Friend acknowledged, we are doing tremendously well in achieving that target. We have agreed when we will achieve it, and the European Union has agreed that other nations should achieve it. It will have a tremendous effect on foreign aid, particularly for Africa. Whatever is agreed at the G8, we all agree that there have been tremendous advances in the past few months on the amount of money to be given to those countries. Six or seven months ago, everybody said that that was not possible and that we would not be able to secure an agreement. That contrasts strongly with the halving of foreign aid by the Tories in the last Administration.

Mark Pritchard: Will the Deputy Prime Minister take the opportunity to apologise to my constituent, Miss Emma Walker of Leegomery, who has been suffering from toothache for over 12 months? Despite 25 attempts, she is still unable to register with an NHS dentist. What is the Deputy Prime Minister going to do about it?

John Prescott: The hon. Gentleman should take into account what happened to dentistry under the previous Administration. The Tories closed down two training schools and introduced a new contract that drove most dentists into the private sector. We have been trying to deal with those difficulties. Let me give him some facts. The number of primary care dentists has gone up from 16,700 in 1997 to over 20,000. Our target to recruit the equivalent of 1,000 dentists by October will mean 2 million more people can be treated. Those are the improvements that we have achieved after the mess that we inherited. Fifty-three dental access centres provide treatment for over 400,000 people. We recognise the difficulties, but we are dealing with them and are making improvements. That was covered in a recent debate in the House, when it was made clear that major improvements are comingnot enough, but they are on the way. We are going in the right direction, because we believe in a national health service, not a privatised one.

Kali Mountford: I am visiting two school assemblies on Friday to discuss the Make Poverty History campaign. Will my right hon. Friend send a message to those two school assemblies about how they can ensure that making poverty history does not start and end with a concert, but is something that we should all do throughout our lives to make sure that the scourge of poverty is not visited on their generation?

John Prescott: My hon. Friend is right, and it is right to talk to the youngsters in our schools about it. From my visits to schools, I have noticed that they are keen to talk about it and ask us why we are not doing enough. That is the experience of most people. However, we should recognise that the concerts have played a major part. Let us give credit to people who have gone out and put the poverty issue on the map, assisting both the Chancellor and the Prime Minister, who have constantly carried the message abroad. The recent concerts played a major part in putting it publicly on the agenda, with many people saying, Do something about it and do it now.

Michael Ancram: When the Prime Minister said last week that he wanted to get rid of the common agricultural policy, what did the Deputy Prime Minister understand him to mean by that?

John Prescott: The Prime Minister was making it clear, as he did in his speech in Brussels, that he wanted to see the CAP changed. From the anomaly of the CAP came the rebate, and he was suggesting in his presidency speech that we needed to take both into accountthat if we wanted a modern financial facility for Europe, we had to make major changes, and that for the CAP to take about 70 per cent., to be reduced to 40 per cent. by 2013, was still not good enough. I toured the eastern European countries recently, and they are clear that they want a modern economy, not one simply geared to conserving, as the common agricultural policy does.

Michael Ancram: The Prime Minister did not just talk about changing the CAP. He spoke last week of getting rid of the CAP and we need to know how he intends to do that. Did he really mean scrapping all support schemes for agriculture, did he mean, as we do, an alternative system for environmental protection, or did he mean some other means of support? Surely as president of the European Council, the Prime Minister knows how he will secure his stated aim, or is this once again a case of brave words that will be followed by inaction?

John Prescott: No, the Prime Minister certainly wants to get rid of the present CAP. He recognises that there are arguments about the subsidies and the CAP. I should be very surprised if a Tory Administration did not see an argument for subsidies being used in the common agricultural policy. It is about getting a proper balance, which we do not have in the present financial facility in the Community. That is what my right hon. Friend meant. We made it clear in our manifesto that we want to get rid of the export subsidies by 2010. There are changes that we want to make and we have outlined them, so that, for the first time, the issue has been seriously put on the agenda by the Government and is now the subject of serious debate.

Michael Ancram: Can the Deputy Prime Minister then confirm that getting rid of the CAP would require renegotiating the treaties?

John Prescott: The right hon. and learned Gentleman calls for changes. Our Government have made the position clear. I get the feeling that his demands are more of a leadership bid from him on the CAP than anything to do with change.

Michael Ancram: It is clear that the Deputy Prime Minister has no idea that getting rid of the CAP requires renegotiating the treaties. Is it not extraordinary that, at the beginning of the British presidency of the European Council, the Government do not seem to know where they want to go in Europe, whether they will defend our rebate, how they will achieve the Prime Minister's aim of getting rid of the CAP, or whether they want the constitution brought back or not. Would the Government not do well to take a leaf out of a former Prime Minister's book and start demonstrating a bit of clarity and deploying a bit of handbag?

John Prescott: I have no doubt now that this is the start of the right hon. and learned Gentleman's leadership campaign. I notice he made a speech last night in which he left open the question of whether he is running. I hope he does, because the contest needs a bit of class. He also said in his speech last night that the Conservatives as a party lacked character, coherence and context. Well, he is spot on there. I have been telling him that for years. If he stands, that makes 11 candidates so far, some of them on the Front Bench. There might be moreperhaps we could find out. Can he help the country by asking those who intend to be candidates in the election to put their hands up? [Interruption.] Oh, we have got one. That makes 12. Now we have the dirty dozen.

Martin Linton: Will my right hon. Friend find time to visit London's biggest regeneration project at Battersea power station? Will he particularly welcome the jobcentre that opened yesterday, where the developers, the Department for Work and Pensions and local colleges are working together, with funding from the single regeneration budget, to ensure that local people can take up at least a third of the 9,000 jobs that the project will create?

John Prescott: I agree with my hon. Friend. That is a further example of the fact that, after nearly eight years in government, the number of those in work continues to increase. No Government have had a month-on-month increase in employment for such a long period of time. I am delighted that Battersea power station will now be used, as that development has been wanted for several years. I looked at the facility seven or eight years ago. It was visited by the Secretary of State for Work and Pensions, who pointed out just how many jobs will come from the creation in London of this new facility, along with new development and regeneration. Again, it shows our Government at the fore in putting employment, regeneration and improving the quality of people's lives first.

Brian Binley: Mr. Deputy Prime Minister, three weeks ago the Prime Minister was asked to meet a delegation about the underfunding of police in Northamptonshire, which has continued for a considerable number of years. He did not answer. My grandmother always said, Never trust a man who doesn't give a straight answer. [Interruption.]

Mr. Speaker: Order. The hon. Gentleman must be quick with the question.

Brian Binley: Will the Deputy Prime Minister now answer on the Prime Minister's behalf?

John Prescott: Clearly the hon. Gentleman is after the granny vote. He talks about reductions in police forces and resources. In his area, under a Labour Government, we have provided a record number of police officers1,264, which is 87 more than in 1997plus 39 community support officers. He is typical of Tories who arrived here having fought the election saying, Cut taxes and yet increase support and finances for public services. It would have been better if he had got up and congratulated a Labour Government on giving his constituency more nurses, more hospitals, more teachers, and more police, and reducing long-term unemployment there by 77 per cent.

Paul Farrelly: My right hon. Friend is rightly a great champion of regenerationit is his passion and he is quite open about it. However, in north Staffordshire openness and transparency on this vital issue have recently taken a step back. Our regeneration zone body has not only become a private company but unjustifiably decided that it can behave like a private company and meet behind closed doorsjust like Marks and Spencer, as its director said yesterday. Does my right hon. Friend agree that openness and accountability are vital for public confidence in regeneration and that such bodies should meet in public and maintain access?

John Prescott: My hon. Friend raises a serious point. He has two regeneration bodiesRenew, the pathfinder, from which I believe that he gets the fullest co-operation, and the regeneration zone body, with which he has had difficulties. All these organisations are publicly funded bodies and should make available to Members of Parliament the information that they want about regeneration in their area. I am sad to hear what my hon. Friend says; perhaps if he wants to have a chat with me, I will take it up with the authority. I want to make it clear that, as more and more such bodies are set up, the fact that they may be some distance away from us does not mean that they should not be accountable to public representatives, especially to Members of Parliament who rightly ask for information.

John Baron: The Deputy Prime Minister will be aware that the Government overruled the planning inspector and Basildon council and gave Travellers, who had built illegally on greenfield land in Crays Hill, a two-year extension in which to move on. Given that, in that period, the number of caravans on the illegal site has increased from 20 to 86, and that the cost of eviction has now risen to 2 million, representing approximately 15 per cent. of one year's council tax, will the Government financially assist Basildon council to meet the increased eviction cost so that local taxpayers are not unfairly penalised?

John Prescott: The hon. Gentleman knows that he raises a difficult problem for certain areas. I am bound to say that the previous Administration relieved local authorities of the responsibility of providing land for sites, and many Gypsies therefore move on to unauthorised sites or buy the land. Those circumstances are difficult to tackle. However, fewer caravans are being registered in those areas and we hope that there will be a reduction in numbers. Our actions to give advice to local authorities are beginning to work and I hope that we can deal with the problem of the Gypsies reasonably and openly. It is a pity that a fraction of all the money that is spent on legal expenses for removing the Gypsies is not used for providing land and lessening the problem.

Social Behaviour

Graham Allen: If he will take steps to ensure that the same priority is given across Government to promoting social behaviour as is given to tackling antisocial behaviour; and if he will make a statement.

John Prescott: Our priority is always the rights of the law-abiding majority. That is why we are tackling and not tolerating the problem.

Graham Allen: Does the Deputy Prime Minister accept that prevention is almost as important as cure in the case that we are considering? As the Cabinet's antisocial behaviour sub-committee begins its work, will he ensure that he puts before it preventive measures such as ensuring that parenting skills are taught at every school and that tracking and intervention by public authorities is more coherent so that we have early intervention? Will he also ensure that placing social behaviour on the national curriculum alongside literacy and numeracy is considered? Will he be tough on antisocial behaviour but also ensure that he is tough on the causes of antisocial behaviour so that we do not all have to pick up the pieces later?

John Prescott: The House is aware of my hon. Friend's campaign on the matter. The problem faces every one of us in our constituencies. We are doing a lot in providing Government money for priority programmes. One such programme, Sure Start, is a long-term programme. Another provides resources for helping the parents, for which approximately 400 million is being spent. Citizenship is part of the curriculum in schools. The other matters should also be included. We intend to take a more comprehensive approach.

Engagements

Paul Holmes: There are 10,000 council tenants in Chesterfield and a satisfaction rate of 84 per cent. with their excellent Liberal Democrat council. They pay 22 million in rent to the housing department but the Government steal 3 million to 4 million a year of that money to spend on housing elsewhere in the country, such as London. If the tenants transferred to a housing association, the money would be allowed to stay in Chesterfield. The Deputy Prime Minister told the Labour

Mr. Speaker: Order. Will the Deputy Prime Minister try to answer?

John Prescott: I think that the hon. Gentleman's complaint is about the clawback of rent resources. He knows that all Governments have taken the view that council house rents and revenues are national assets, which the national Government finance. The agreement has stood between all Governments so farnot the Liberals, because they did not do that in 1900. We have agreed that some of the money should go back. Some of our equity agreements on social housing allow local authorities to keep 100 per cent. of the money. I have heard the hon. Gentleman's point about council housing often in debates here. However, we have put 23 billion into improving housing stock, which was in a bad way. I do not know what it was like in Chesterfield but when we asked tenants to participate in the debates, approximately 189 ballots took place in only 28 of which was the vote against. They find this way of dealing with things satisfactory. Perhaps the hon. Gentleman should chance his arm and ask the tenants instead of giving us his view.

Stephen Hesford: My right hon. Friend will know that Merseyside pioneered neighbourhood policing. He will also know that Wirral pioneered the use of community support officers to tackle antisocial behaviour. The 60 extra police officers provided over the past nine months, and the other initiatives and extra resources, have caused the number of burglaries to fall by 25 per cent. and the number of robberies by 43 per cent. What additional measures has my right hon. Friend in mind to build on that success?

John Prescott: We have put a tremendous amount of resources into policing. A target has been set, and we have increased the number of police officers by about 13,000 since 1997.
	The community support officers are very popular indeed. Already 6,000 have been appointed, and we hope to increase the number to 24,000. I have no doubt that Members discovered during the general election campaign that wardens and community support officers were very popular, and that there was a correlation with the lower crime figures.
	We think that what we are doing is right, and it is a priority for us. We are finding that it requires resources, but the Conservative party is committed to reducing them.

Peter Tapsell: Given his well-known commitment to European solidarity, can the right hon. Gentleman estimate the number of European leaders attending today's G8 summit who admire the statesmanship shown by our Prime Minister in helping to plunge Iraq into a chaos that the United States Defence Secretary thinks may last for 10 or 12 years?

John Prescott: It should be made clear that, as the Prime Minister has said in answer to questions about statements made in America, we as a party and as a Government will retain our military forces in Iraq for as long as it is necessary to carry out that responsibility. That is our case, and that is what we will make clear at the G8 summit or anywhere else. Anyone working out how long it will take is a master of pure guesswork. We look to the democratic development that is happening in Iraq, and we greatly welcome it.
	I wondered what question the hon. Gentleman might ask, and looked at some of his past questions. I then took advice from my financial adviser, my hon. Friend the Member for Bolsover (Mr. Skinner), who told me to reply that gold sales were now down.

Points of Order

Alex Salmond: On a point of order, Mr. Speaker. Have you received any notice of a statement from the Secretary of State for Scotland on events surrounding the Gleneagles summit? I understand that there were outbreaks of violence in Stirling and the Perthshire villages this morning, caused by anarchist factions which should be roundly condemned, that road and rail routes to Gleneagles have been disrupted or blocked, and that the police have been unable to protect the right to hold legitimate and approved demonstrations at Gleneagles today.
	These are crucial matters, Mr. Speaker. They touch on public safety, freedom of assembly and freedom of speech. Would it not be appropriate, especially as the Scottish Parliament is not currently sitting, for the Secretary of State to keep the House involved and informed of developments as they happen?

Mr. Speaker: The hon. Gentleman asked me at least two questions. [Interruption.] Order. Hon. Members who are leaving should not walk in front of the hon. Gentleman who has the floor.
	The hon. Gentleman asked whether I had received an approach from the Secretary of State for Scotland; the answer is no. He also asked my opinion on whether the Secretary of State should come to the House. That is a matter for the Secretary of State's judgment.

Lembit �pik: On a point of order, Mr. Speaker. You will know that during the suspension of the Northern Ireland Assembly, which has continued for some time, the Government have resorted to the use of statutory instruments and Northern Ireland Grand Committees to conduct the governance of the nation. The problem is that neither of those two vehicles enables legislation to be amended in any way. On every occasion, there must be a simple yes/no decision.
	Is there anything we can do, Mr. Speaker, to make the governance of Northern Ireland more democratic and flexible, rather than disrespecting the will, the interests and the preferences of the House because the Government are unwilling to give Northern Ireland politicians and representatives of the respective Northern Ireland parties any chance to amend legislation in the Chamber?

David Lidington: Further to that point of order, Mr. Speaker. May I associate myself with the comments made by the hon. Member for Montgomeryshire (Lembit pik) and put it to you that it is a denial of the democratic rights of the people in Northern Ireland for their representatives to be unable to move amendments and debate in detail matters that, were they to affect other parts of the United Kingdom, would be the subject of full legislative procedure? Is it possible for you to use your offices to encourage cross-party discussion, within the parties represented in the House, about alternative ways forward?

Ian Paisley: Further to that point of order, Mr. Speaker. I would like to support the hon. Gentlemen who have spoken. It is a great source of difficulty to us not to have the Northern Ireland Grand Committee meeting in Northern Ireland, which is because Social Democratic and Labour party Members are refusing to co-operate.

Mr. Speaker: I do not want to be drawn into that particular argument. Obviously, as a parliamentarian, I want to see the democratic institutions being used throughout the United Kingdom. The matters that the hon. Gentlemen have raised, however, are not within my powers. I know, however, that the Secretary of State for Northern Ireland has been present in the Chamber, and will have heard the concerns expressed by Members from the parties concerned.

David Davies: On a point of order, Mr. Speaker. You will be aware that last November the then Secretary of State for Health ordered a report into serious allegations that the British Pregnancy Advisory Service had been encouraging women to go to Spain to undergo abortions after 24 weeks. That report has now been completed and is with the current Secretary of State for Health. In response to several written questions about when that report will be published, however, she will only say that it would be inappropriate to comment further. Because of that, the Table Office refused to accept any further questions about the matter. Can you advise new Members how we can encourage Ministers to maintain the commitment to openness and transparency that they often trumpet, and how we can persuade them to publish the report and answer questions about it?

Mr. Speaker: The matter that the hon. Gentleman raises is not a matter for me, except to say that his more senior colleagues will help him to draft more and more questions and to seek an Adjournment debate, on which a ballot takes place and on which I have discretion, but I make no promises. He must pursue those matters as a Back Bencher.

John Bercow: On a point of order, Mr. Speaker. I seek your guidance as to whether you have had an indication from the Foreign Secretary that he wishes to make a statement to the House about the size and composition of his ministerial team. Given the enormous importance, on which Members throughout the House agree, of tackling global poverty on the one hand, and the fact of the G8 summit at Gleneagles on the other, is not it extraordinary that the Minister exclusively responsible for Africa and answerable to this House has been sacked and replaced by a Minister who is not exclusively responsible for Africa and who is not answerable to this House?

Mr. Speaker: The sacking of Ministers is absolutely nothing to do with me.

BILL PRESENTED

International Development (Anti-Corruption Audit)

Mr. William Cash, supported by Mr. Edward Leigh, John Bercow, Mr. Peter Lilley, Sir George Young, Mr. Lindsay Hoyle, Mr. Laurence Robertson, Mr. Jeffrey M. Donaldson, Nick Harvey and Mr. Shailesh Vara presented a Bill to amend section 7 of the International Development Act 2002 to require the imposition of conditions relating to internationally supervised audit on assistance: And the same was read the First time; and ordered to be read a Second time on Friday 14 October, and to be printed [Bill 40].

Representation of the People (Amendment)

Patrick Cormack: I beg to move,
	That leave be given to bring in a Bill to amend the Representation of the People Acts in respect of deceased candidates.
	Obviously, I should begin by declaring a recent interest in this subject. May I also say to you, Mr. Speaker, and to Members in all parts of the House, how grateful I have been for the welcome that I have received on my delayed return to the House? Although I realise that that welcome has been genuine, it has also been partly prompted by the fact that every Member knows that there but for the grace of God could he or she have gone. I seek to save any colleague in any part of the House from having to face the sort of long ordeal that I had to face in May and June. I am grateful to the Minister of State, Department for Constitutional Affairs both for her helpful encouragement and for her presence here today.
	I shall explain briefly why I seek to bring in the Bill. On 1 May I became the victim of a law drawn up in an era when most election contests were either straight fights or three-cornered ones, before the proliferation of candidates that is now so common in almost every constituency.
	There are four main defects in the law. First, the party affected by the death of the candidate has no chance either to field a substitute or to withdraw from the election. Secondly, the law does not distinguish in any way between candidates. If any one of the Prime Minister's 14 opponents had died, right up until the declaration of his result, he could not have been elected on 5 May. And if Catherine Taylor-Dawson of the Vote for Yourself Rainbow Dream Ticket party had died, there would have been chaos in Wales. She obtained one votepresumably her ownin Cardiff, North, but she also stood in all three other Cardiff seats, polling a total of less than 300 votes in all four. If she had died, Cardiff would not have been represented in the House at alland I remember the day, in 1974, when the Government had an overall majority of four. Colleagues should reflect briefly on the consequences of such an action. And what if a single candidate stood against every Member for the Cabinet and then committed suicide? [Hon. Members: Any volunteers?] Those are all practical possibilities.
	Thirdly, the length of the delay is surely inordinate. Twenty-eight days after the proof of death the writ is reactivated, which gives a minimum of seven weeks' delay before the new election.
	Fourthly, new entrants are allowed into the field. Although the new election is supposed to be, and indeed legally is, part of the general election, new candidates who had not signified their original intention to stand are allowed to enter.
	My Bill does not propose to allow dead candidates to be elected, as in the United States, but I propose that the party affected by the death should have the choice of withdrawing or substituting a candidate, and that if necessary, a delay of 72 hours would be allowed for the reprinting of ballot papers.
	I am also suggesting that the law should not apply to any independent candidate. An independent candidatethree of the Prime Minister's opponents were designated merely by that wordis by definition sui generis, unique, so if such a candidates dies, that is the end of the matter; nobody can substitute. That should not hold up an election. The law should not apply to any party that polled less than 10 per cent. in the constituency concerned at the previous general election, or less than 5 per cent. nationally, if the party did not contest the constituency concerned. That would solve the problem of maverick or mischievous candidates bringing constitutional chaos to the country. I also suggest that no candidate should be allowed to stand in more than one constituency.
	My final main proposition is that the delay between the death and the new polling day should in no circumstances be more than 28 days. Last time such a thing happened was in 1951, and in those days the law said that no more than 14 days should pass. Perhaps that timing was a little tight, but 28 days should be ample even for a major party to find another candidate.
	Finally, no new candidate who had not signified an intention to stand in the original election should be allowed to stand in the rescheduled election. Nor should any major party be allowed to substitute its original candidate without the certification of the returning officer that the reason is a genuine and acceptable one. I had a new Labour opponent and I am not suggesting that the reasons for the substitution were anything other than genuine and entirely acceptable, but I do not believe that substitution should be automatically allowed.
	As it stands, the law at the moment qualifies for Mr. Bumble's famous description that the law is an ass. It needs changing because the case that I have illustrated has brought to wider public attention what can be done by mischief makers or malevolent people. I am most anxious that, before the next general election, we should have tidied up the law.
	What I am proposing is a partial repeal of that worst of all lawsthe law of unintended consequences. I very much hope that all Members on both sides of the House will feel able to join me and my distinguished sponsors and give the measure a fair wind.
	Question put and agreed to.

Patrick Cormack: Before I formally read out the list of supporters, I want to thank my hon. Friend the Member for Lichfield (Michael Fabricant), to whom I am most grateful for having the opportunity to present my Bill today.
	Bill ordered to be brought in by Sir Patrick Cormack, Mr. Alan Beith, Sir Menzies Campbell, Mr. Robin Cook, Mrs. Gwyneth Dunwoody, Michael Fabricant, Chris Grayling, Mr. Austin Mitchell, Mr. Mark Oaten, Rev. Ian Paisley, Ms Gisela Stuart and Sir George Young.

Representation Of The People (Amendment) Bill

Sir Patrick Cormack accordingly presented a Bill to amend the Representation of the People Act in respect of deceased candidates: And the same was read the First time; and ordered to be read a Second time on Friday 28 October, and to be printed [Bill 41].

Orders of the Day
	  
	Finance Bill

Not amended in the Committee and as amended in the Standing Committee, to be considered.
	Ordered,
	That the Finance Bill, as amended, be considered in the following order, namely,
	New Clauses, amendments relating to Clauses 1 to 6, Schedule 1, Clauses 7 to 12, Schedule 2, Clauses 13 to 24, Schedule 3, Clauses 25 to 34, Schedule 4, Clause 35, Schedule 5, Clauses 36 and 37, Schedule 6, Clauses 38 and 39, Schedule 7, Clause 40, Schedule 8, Clauses 41 and 42, Schedule 9, Clauses 43 to 49, Schedule 10 and Clauses 50 to 69, new Schedules, amendments relating to Clause 70, Schedule 11 and Clauses 71 and 72.[Mr. Watts.]

New Clause 1
	  
	Inheritance Tax

The Inheritance Tax (Delivery of Accounts) (Excepted Estates) Regulations 2004 (S.I., 2004, No. 2543) are amended as follows:
	Regulations 6,7,8,9 and 10 shall cease to have effect in respect of a person who dies on or after 31st July 2005..'.
	Brought up, and read the First time.

Philip Hammond: I beg to move, That the clause be read a Second time.

Mr. Speaker: With this, it will be convenient to take new clause 8Inheritance Tax (No. 2)
	'The Inheritance Tax (Delivery of Accounts) (Excepted Estates) Regulations 2004 (S.I., 2004, No. 2543) are amended, in Regulation 6, line 4, by omitting must and inserting may.'.

Philip Hammond: New clauses 1 and 8 take a slightly different approach to a problem while delivering, in essence, the same outcome. I shall explain during the course of my remarks why we have chosen to table two different solutions to the problem that we have identified.
	New clause 8 amends the Inheritance Tax (Delivery of Accounts) (Excepted Estates) Regulations 2004a snappily named little piece of secondary legislationthat was made with respect to section 256 of the Inheritance Tax Act 1984. It is designed to amend the provision by omitting must and inserting may, thus making the delivery of a return permissive. New clause 1 adopts a rather more radical approach by disapplying regulations 6 to 10, dispensing with the requirement for returns altogether.
	The regulations that the new clauses amend make provision in relation to the delivery of accounts and other information for inheritance tax purposes. As is often the case, the 2004 regulations were presented as a deregulatory measureand to some extent they are. Prior to the 2004 regulations[Interruption.] Judging by the noises off, Mr. Speaker, I suspect that we have a result from Singapore. Before those regulations, estates just below the inheritance tax value were required to deliver a full account to the Revenue.

Dawn Primarolo: On a point of order, Mr. Speaker. Please forgive me for interrupting the hon. Gentleman, but I am sure that he would like to know that the successful bid for the Olympics is London. [Hon. Members: Hooray!] I should like to take the opportunity, on behalf of the House and the country, to thank all those involved in the preparation and delivery of a fantastic bid. I am sure that all of us look forward to welcoming the Olympics to London, to ensuring that this country represents itself and the Olympic spirit to the very best of our ability, and that it makes us proud.

Philip Hammond: Further to that point of order, Mr. Speaker. May I associate the Opposition with the right hon. Lady's remarks and pay tribute to everybody who has worked so hard to ensure that this bid was successful? I pay tribute in particular to my noble Friend the Lord Coe[Hon. Members: Hear, hear.]who has done so much to ensure that the bid was successful, and who has worked tirelessly with members of all parties and with members of the Government.

Several hon. Members: rose

Mr. Speaker: Order. I hate to put a dampener on any celebrations and I am personally delighted, but I cannot take any more points of order on this matter. There will be an opportunity for the appropriate Minister to come before the House and for us to discuss the matter fully. Standing Orders tell me that we must get on with the business in hand.

Philip Hammond: Thank you, Mr. Speaker. The challenge that the House now faces is how to make the Inheritance Tax (Delivery of Accounts) (Excepted Estates) Regulation 2004 seem remotely interesting. But we will do our best.
	The regulations that the new clauses seek to amend make provision for the delivery of accounts and other information for inheritance tax purposes. As I have said, the 2004 regulations were presented as deregulatory, and to some extent they are. Before their introduction, estates that were just below the inheritance tax value were required to deliver a full account to the Revenue, and were known as excepted estates. Regulation 3 provides that a person is no longer required to submit an account under the terms of section 216 of the Inheritance Tax Act 1984 if the property is an excepted estate. This is in fact a perfectly sensible measure, reducing the compliance burden on some 30,000 estates valued between 240,000 and 275,000 every year.
	However, what was billed as a relieving measure is not so in practice. As so often with this Government, the deregulating instinct has been swamped by the regulating instinct of bureaucracy, and what regulation 3 gives, regulation 4, I am afraid, takes awayin spades. The 2004 regulations provide that all estates below the inheritance tax threshold, and which are valued at more than 5,000, are now classed as excepted estates. Regulation 6 provides that
	a person who by virtue of these regulations is not required to deliver to the Board an account under section 216 of the 1984 Act . . . must produce the information specified in paragraph (2) to the Board in such form as the Board may prescribe.
	In other words, the Government have scrapped the requirement to return an account for 30,000 excepted estates on form IHT200, but they have introduced a new requirement for some 300,000 estates per year. All those 300,000 estates are worth less than the IHT threshold and have no tax to pay, and all of them had no requirement whatsoever to make a return of any kind until the 2004 regulations were introduced. A requirement has now been introduced for those estates to make a return
	in such form as the Board may prescribe.
	The prescribed form is in fact form IHT205.
	I have a copy of form IHT205 in front of me. It is a four-page document in the typical style of a tax return. It is laden with complicated and intrusive questionsso much so that there are 23 pages of accompanying guidance notes and 16 pages of annexes. The information required by the form includes details on the deceased's occupation and that of surviving relatives; gifts given by the deceased over the past seven years; overseas assets; pensions; cash, including money in banks, building societies and national savings; value of household and personal goods; stocks and shares quoted on the stock exchange; stocks and shares not quoted on the stock exchange; insurance policies, including bonuses and mortgage-protection policies; money owed to the deceased; residences; partnerships and business interests; debts of the deceased; and funeral expenses.
	That is just what a grieving relative needs! We should remember that this requirement applies to estates below the inheritance tax thresholdto so-called excepted estates. It would be quite interesting to know what the Treasury understands by the term excepted. In case anyone is tempted not to treat this intrusion with the seriousness it deserves, the document warns that there may be
	financial Penalties if the answers to the questions or figures given are wrong.
	So before one completes the form, one must make full enquiries as to the value of the deceased's household and personal goods. Estimates are explicitly unacceptable. Gathering this information could take a bereaved relative weeks or even months, and cause quite unnecessary stress at a time of personal grief.
	Given the form's complexity and jargon-laden language, and given the difficulty that most lay people will have in distinguishing between the different classes of assets and liabilities that they are required to record in different parts of the form, manyif not mostrelatives will seek the help of a solicitor in completing it. However, they will have no choice but to assemble the bulk of that information themselves, as a solicitor would be unable to aggregate it for them. Based on last year's figures, an extra 246,872 estates now have to file a return. Based on an average solicitor's hourly rate, and assuming approximately one hour's-worth only of work and correspondence, this provision will cost the average estate between 150 and 250. That equates to between 37 million and 62 million in legal bills alone each year, and for what? This is not a return of inheritance tax due; it is a regime that applies exclusively to estates below the inheritance tax threshold.
	This is a massive and intrusive fishing expedition that involves trawling, collecting and storing informationin minute detailon those who are supposed to be outside this particular tax net and free of the hassle of compliance. It turns on its head the previously accepted position that the details of an estate below the IHT threshold were not a matter for the Revenue.
	New clause 1 removes the regulations requiring reporting of excepted estates on form IHT205 altogether, thus relieving 300,000 bereaved families each year of this insensitive and unnecessary burden. New clause 8 seeks to achieve the same objective by a slightly different route. It leaves the provisions in regulations 6 to 10 in force, but makes compliance with them optional by omitting must from line 4 of regulation 6 and inserting may. Giving taxpayers permission to make a return to the Revenue might seem a curious approach, but we are told that in some cases, professional executors, with a view to their own potential liability, might wish to have the comfort of having made a return on IHT205, thus enjoying the Revenue's confirmationif a notice has not been issued within a certain period under the regulationsthat no tax is indeed payable.
	So new clause 8 leaves the provision force for the benefit of those professional executors who wish to use it, while removing the element of compulsion for the rest of us. We have no difficulty with a solution to this problem that allows those professionals who want to make use of the provisions to continue to do so. Our purpose today is to ensure that this burden is not imposed on ordinary bereaved families who are seeking to act as executors for the will of a deceased person.
	It is our contention that people who are dealing with modest estatesof as little as 7,000 to 10,000, and thus way below the inheritance tax thresholdshould not be subjected to this additional burden at a time of bereavement or have to waste time and money completing a form whose only point is to feed the seemingly insatiable desire of the big brother state for information on every aspect of our lives.
	The measure is an example of a hugely insensitive invasion of privacy. It is an expensive and heavy-handed exercise that will burden some 300,000 estates every year and achieve nothing of practical value except the storing of huge amounts of personal information on everyone leaving an estate in excess of 5,000. All that is concealed behind what turns out to be a paltry relief for a mere 30,000 estates at the very top end of the exception band.
	I hope that the Paymaster General will pledge today that she will end this bureaucratic nonsense, either by accepting the new clauses or by making a definitive promise to introduce something that would have the same effect.

Susan Kramer: Today, the Liberal Democrats and the Conservatives are speaking out together on inheritance tax. That must be an event almost as momentous as London's success in winning the Olympic bid. As a former London mayoral candidate, I welcome that success on my party's behalf.
	The new clauses address a matter that exercises us very much. The Bill breaks a principle, referred to in the past by my hon. Friend the Member for Bristol, West (Stephen Williams), that the Revenue should not go on fishing expeditions and seek by intrusive means information that does not apply directly to its ability to levy tax. The new clauses would remove the information requirement in relation to people who the Government do not believe should be subject to inheritance tax. The Bill would require them to fill out extensive forms at a time of great bereavement to prove that no tax should be paid.
	The Revenue's fishing expedition will expose almost no evidence of tax avoidance. The Chancellor has said with great pride on many occasions that only about 6 per cent. of the estates left after people die in this country are liable to inheritance tax. The vast majority are not liable, and I am sure that all parties share common cause that that should remain the case. The intrusive search for detailed information required by the Bill is therefore unacceptable.
	The concept of excepted estates applies to estates worth 275,000 or less, or to transfers to a spouse. That should be the appropriate benchmark, and we therefore associate ourselves with the new clauses.

Philip Dunne: I hope that the House will excuse the pun, but I have grave concerns about proposals to increase the powers of the nanny state. Her Majesty's Revenue and Customs has all-seeing powers over British taxpayers from the cradle to the grave, and now in the afterlife as well.
	I support new clauses 1 and 8 as a way to restore sanity to families and professionals who have to deal with the immediate effects of the afterlife and sort out estates after people die. That is a very distressing time, and the Government's introduction last year of statutory instrument No. 2543the Inheritance Tax (Delivery of Accounts) (Excepted Estates) Regulations 2004made it immeasurably more distressing. As my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) said, that order extended the requirement to file inheritance tax return form IT205which he illustrated so eloquentlyon all estates worth more than 5,000. Essentially, that requirement applies to every estate that requires probate.
	That is a huge extension of bureaucratic form filling. Previously, one could file a nil return for inheritance tax unless one was within 30,000 of the inheritance tax threshold. Now the form will have to be filed in respect of all estates of over 5,000, and very detailed information on the value of assets will be sought. That information will include details of household and personal goods, and so will require the valuation of the furniture and jewellery, for instance, in an estate. All of that information has to be provided after a full inquiry has been made.

Philip Hammond: I hope that my hon. Friend will forgive me for correcting him, but there was no requirement under the previous regime to file a nil return. People were required simply to swear a declaration that no tax was due.

Philip Dunne: I am grateful for that correction, and my hon. Friend is right to say that it was possible for solicitors to swear an affidavit, although they could choose to file a nil return.
	The requirement would be reasonable if there was a good prospect that additional revenue would be raised, but my hon. Friend has noted already that most estates will be below the threshold and so will not qualify. As a result, the proposal has no revenue-raising potential.
	What is the point of the proposed exhaustive form filling? How many people will be affected? My hon. Friend has given some statistics, but I have some other data that might help Labour Members understand the implications of what is being proposed. About 535,000 people die each year. I learned that statistic in a debate on fallen livestock, when the subject of human death was touched on. Only 35,000 estates pay inheritance tax, so it does not take great mathematical skill to work out that, if all estates were to be affected by probate, a very significant number of people will be affected.
	Presumably, a not insignificant number of forms will land in the HMRC's offices, and will need to be checked. Some errors might be detected where there is a possibility that an estate goes over the threshold, but it is most likely that the forms will sit and gather dust after being collected. Therefore, many people in the bureaucracy will do very depressing work to no purpose.

Stephen Hammond: My hon. Friend mentions bureaucracy, but is not the problem even worse than he sets out? In Committee, the Paymaster General talked several times about the need for anti-avoidance measures and the need to close the tax gap. Would not the money spent on this fishing exercise be better spent on other measures that would close the tax gap?

Philip Dunne: My hon. Friend makes a good point. The HMRC work force is being reduced, so we should look carefully at the tasks that people there are asked to undertake. I hope that the Minister will consider that point.
	There is a wider point in respect of the extension of the inheritance tax net. House price inflation means that more and more people in my constituency are falling into its clutches, with estate values reaching the duty threshold despite the increase introduced in the Budget earlier this year. The Land Registry reports that the average price of properties sold in the south Shropshire district in the first quarter of the year was 208,000. In the Bridgnorth district, the average was 214,600. In the same period, the average price of detached housesthat includes most of the village properties in my largely rural constituencywas 264,000 in south Shropshire and more than 307,000 in the Bridgnorth district council area. As a result, the average houseowner in my constituency is likely to be caught by the inheritance tax threshold.
	Inheritance tax was originally intended to be a tax for the wealthy. It is increasingly hitting the average householder across the country. That is certainly the case in the Ludlow constituency. It is time that we looked at the tax as a whole, and stopped tinkering with extending it at the edges.
	My final point has to do with the direction in which the Government are heading in respect of inheritance tax, which is in stark contrast to the direction that our major economic competitors are taking. I was in Washington DC last month and I discovered that legislation is passing through Congress and they are debating whether the American equivalent of inheritance taxthey call it death tax, rather starklyshould be scrapped or substantially reduced. If our major competitors are planning to scrap inheritance tax, we should think carefully about whether it is appropriate for us to extend the net. Instead, we should perhaps accept the increasingly competitive nature of the global economy in which we all live and consider scrapping inheritance tax.

Dawn Primarolo: It is important to put on the record a few points before responding to the debate. Unfortunately, some of the contributions that we have heard show that hon. Members have failed to appreciate how the system worked under the rules that were in place and how it will work under the rules before us. The hon. Member for Ludlow (Mr. Dunne) mentioned nil returns, and I shall come back to the issue of excepted estates. We are talking not about the entire inheritance tax system but about a special procedure for very small estates that will remove them from the normal procedure. For some 30,000 estates, it will be necessary to fill in only a very short form instead of the full form, over whichincidentallythe Conservative Government were happy to preside for years and years.
	The approach taken in last year's Finance Bill, which was accepted by the House, was for the smaller estates to be subject to the excepted estates procedure. One does not have to be a genius to work out that it is simpler if only a short form needs to be filled outonly four pages, of which the first page and a bit is simple and straightforward stuff such as name and address, followed by yes/no questions and an estimate of the value of the estate, to ensure that it is within the limits of the excepted estates procedureinstead of the full inheritance tax procedure. It is difficult to see why the Opposition have a problem with that.
	Nil returns are not needed, because such estates do not require probate. I shall return to that when I address the issue of the Court Service, which is also part of the new procedure and further deregulates the process. All that is being asked of people is to indicate whether they have properly calculated the size of the estate to ensure that it comes under the smaller estates procedure.

Stephen Hesford: I apologise to the House for not being in my place for the contribution by the hon. Member for Runnymede and Weybridge (Mr. Hammond), although I did hear the contribution by the hon. Member for Ludlow (Mr. Dunne). Based on what he said, does my right hon. Friend agree that the Opposition are really sniping at the fairness agenda? He gave the game away that the Tories' aim is to do away with inheritance tax.

Dawn Primarolo: To be fair to the hon. Member for Runnymede and Weybridge (Mr. Hammond), he did not say that he wanted to abolish inheritance tax, but it has been a feature of such debates in the past that Opposition Members have advocated that approach. The fairness that they are attacking is the fairness that says that whether an individual does their own return through the excepted estates procedure or a solicitor does a return on behalf of someone, the information required is the same and they are treated equally.
	The Opposition also argue that the Government should enable taxpayers to represent themselves and not force them to have recourse to professional advice if that is not necessary. I suspect that the role of solicitors, and what they will be required to do, is at the heart of the Opposition's objection, rather than the information that has to be provided by the taxpayer.

Brooks Newmark: The thrust of the argument made by my hon. Friend the Member for Ludlow (Mr. Dunne) was the form-filling culturesomething that the Government pledged to change and reduce. Why will people be required to fill in forms for estates with a net worth of 5,000, which is a huge difference from the inheritance tax threshold of 275,000? Those forms will also require more and more bureaucrats to assess them.

Dawn Primarolo: I hope that when I explain how the process works now, the hon. Gentleman will realise that that question is based on a basic misunderstanding of what is required under the inheritance tax system. I am sure that he would accept that it is not unreasonable for any Government to require people to go through certain steps to ensure that the estate with which they are dealing should go through the excepted estates procedure, rather than the full inheritance tax procedure. That is all that is happening.
	I find it odd that the Conservatives did not struggle with this point last year, because all these procedures were in last year's Finance Bill[Interruption.] I appreciate that the hon. Gentleman is a new Member, but his Front-Bench colleagues are not. There has been wide discussion of the issue and none of the suggestions made have caused any difficulties. Indeed, the connection with the Court Service is a further deregulatory measure that has helped enormously.

Philip Hammond: Will the Paymaster General give way?

Dawn Primarolo: No, because I wish to reply to the points made by the hon. Member for Richmond Park (Susan Kramer). The hon. Gentleman can reply at the end of the debate.
	The hon. Lady suggested that the proposals were fishing trips, but that is not the case. It is careless talk to accuse the tax authorities of that when they are simply requiring people to answer questions to ascertain whether an estate comes under the excepted estates procedure. People had to fill in forms before, so it is not as if that is new. The issue is the length of the forms and the information that is collected. We are talking about small estates, which have always, as I said when I began my remarks, had to show the Revenue that they were entitled to use the excepted estates procedure. Applicants without a solicitor filled in a form that was much like the present form, so it is not true to suggest that there are additional burdens.

Philip Hammond: rose

Dawn Primarolo: No, I shall not give way to the hon. Gentleman at this point.
	New clauses 1 and 8 would both amend the 2004 regulations, known as the excepted estates regulations, which are subject to that procedure. The hon. Member for Runnymede and Weybridge said that the new clauses offered two different solutions. They are interesting solutions. One of his new clauses completely abolishes the procedure and the other gives the Inland Revenue discretion to decide when the procedure would work. As the hon. Member for Richmond Park was so concerned about fishing trips, I should, on her behalf, be a bit worried about supporting new clauses that allowed the Inland Revenue, or Her Majesty's Revenue and Customs, to decide in such cases.
	New clause 1 removes the current obligation on executors applying for probate to give details to the Court Service about the deceased person, their assets and values, when using the excepted estates procedure, whereas new clause 8 is apparently designed to give HMRC discretion over which details have to be given in such cases. I would have thought that either solution was rather undesirable. The aim in either case

Philip Hammond: rose

Dawn Primarolo: The aim in either case seems to be

Philip Hammond: On a point of order, Mr. Speaker. I am sorry to have to raise this on a point of order, but the right hon. Lady will not give way to me. She has, I fear, inadvertently misled the House by saying that new clause 8 would provide that the Inland Revenue has the option of requiring a return to be made. In fact, it gives the taxpayer the option of making a return if he chooses to do so, and I should be grateful if she could confirm that that is the case.

Mr. Speaker: That is not a point of order. The hon. Gentleman knows that he will have an opportunity to reply to the Paymaster General and he can then put the record straight, if he so wishes.

Dawn Primarolo: Thank you, Mr. Speaker. What the hon. Member for Runnymede and Weybridge thinks his new clause may do and what I am advised by my officials that it will do, on which basis I advise the House, is always a matter for debate when amendments are proposed, but I shall repeat what I have said.
	New clause 8 is apparently designed to give HMRC discretion over which details have to be given in those cases. The aim of both new clauses seems to be to reverse or modify the changes that the Government made last year, and to go back to the previous system whereby personal applicantsthose not represented by a solicitorhad to fill in forms about the estate, whereas legally represented estates did not have to do so.
	The House may find it helpful if I provide some details about the administrative arrangements for such estates. The excepted estates procedure is a streamlined process for estates that are relatively small and relatively simple. If the estate qualifies, the executors are allowed to fill in a simple form and get probate immediately. Delivery of the form to the Court Service also satisfies their inheritance tax obligations, so they need have no direct contact with HMRCso how having no direct contact with HMRC empowers HMRC to go on a fishing trip beggars belief. Executors otherwise have to fill in a much more comprehensive form and send it to HMRC before they can get probate. The process thus provides links with probate, which ensures that it would be speedy for small estates, and relates exactly to the point that the hon. Gentleman made about the importance of speed in such cases.
	The excepted estates procedure has always been restricted to estates that satisfy tests of size and complexity as set out in HMRC regulations. I think that we would all agree that eligibility should be limited in that way, as there is always a risk that large estates might slip through untaxed. We are getting the balance right by ensuring that there is speed for excepted estates, especially at probate, and that there is one point of delivery to the Court Service, with the ability to monitor the proper use of that process through HMRC.
	The questions for this afternoon relate to how executors should establish that they qualify for the excepted estates procedure and what they have to tell HMRC about their workings. Before I move on to the detail of the changes that the Government made last year, it may help the House if I briefly describe the probate and IHT reporting system as it stood before the changes made in 2004.
	Estates fell into three broad categories for reporting purposes. If the estate was worth more than 240,000, a full IHT return was requirednot the short form in use at present. If the estate was worth less than 240,000 and the executor was a personal applicant, they had to fill in a short form very much like the one in use now. If the estate was worth less than 240,000 but a solicitor was acting for the executor, the executor simply had to swear an oath that the estate was worth X,000 to demonstrate that it qualified for the excepted estates procedure. Under the old rules many executors had to fill in a full IHT return even though the estate paid no tax. The Government changed the rules last year primarily to bring most of those casesabout 30,000into the excepted estates procedure, thereby reducing their compliance costs whether or not they were represented by solicitors. We moved them from the more complicated system to the excepted estates procedure. However, extending that procedure to bring in many more cases, many of them much bigger than those that were previously clearly eligible, increases the risk of non-compliance; so in striking the right balance, the Government took the opportunity to streamline the detailed procedure, improve co-ordination between HMRC and the Court Service, and update IHT protection against non-compliance.
	As part of that process, the Government unified the two existing procedures for executors using the excepted estates procedure, so that they all now fill in the same short form whether or not they are advised by a solicitor. As I said, the form contains the minimum number of questions needed to show that the estate is entitled to use the excepted estates procedure and to allow HMRC to make a risk assessment.
	The new clauses seem intended to reverse all those changes, so that some or all executors would be entitled to claim access to the excepted estates procedure without giving even basic information about the facts that would justify their using it. The Government's view is that that is misconceived. To qualify for the excepted estates procedure, executors have always been required to know the total value of the estate and key points about what it contains, and solicitors will always have to establish those basic facts.
	The form that executors must now fill in only sets out systematically the questions that solicitors have been asking their clients already, before putting them through the excepted estates procedure. They are already collecting such information to satisfy themselves that their clients could use the excepted estates procedure. To be fair to solicitors, the overwhelmingly majority of them clearly took those obligations seriously. However, there have been indications that there were issues on different occasions, but none has been demonstrated with the new procedure.
	To sum up, the uniformity that the Government built into the system in 2004 strikes the right balance. It is deregulatory. It unifies processes. It treats people equally. It ensures that the returns give the pertinent information only and are not excessive. It is fair to all taxpayers and to the Exchequer. It encourages executors to apply the same accuracy when completing the short form as they have done when filling out the full IHT return. On that basis, I suggest that hon. Members have no grounds to pursue the issue of fairness. I hope that, having heard the explanation of last year's changes and what they are achieving in the system, the hon. Gentleman will consider withdrawing the motion, but if he feels unable to do so, I will urge my hon. Friends to oppose the new clause.

Philip Hammond: I can assure the right hon. Lady that I feel unable to do any such thing, having heard no such thing.
	Let me deal with a couple of specific points. The right hon. Lady suggested that it was bizarre that such issues were being raised now and asked why they had not been raised in greater depth during the consideration of the Finance Act 2004. She will have information to hand, but I understand that form IHT205 and the guidance notes for completing it were published only in November 2004, after the Finance Act 2004 had completed its passage. On the basis of what we have seen published, what we have seen in practice and what practitioners and, indeed, non-professional executors are reporting, we have sought to raise the issue today.
	The right hon. Lady told the House that new clause 8 would give the Revenue the option to require a return. In response to my attempt at a point of order, Mr. Speaker advised me that I should address this question in my closing remarks. Perhaps the best thing that I can do is to read out the opening paragraph of regulation 6 of the Inheritance Tax (Delivery of Accounts) (Excepted Estates) Regulations 2004, as it would be amended by new clause 8, and let the House decide whether or not she is correct. Paragraph (1) would say:
	Subject to paragraph (3), a person who by virtue of these Regulations is not required to deliver to the Board an account under section 216 of the 1984 Act of the property comprised in an excepted estate, may produce the information specified in paragraph (2) to the Board in such form as the Board may prescribe.
	That does not suggest any doubt at all to me that the option lies with the taxpayer, not with the Revenue.
	The right hon. Lady has confused the question of the change to treatment for what were approximately 30,000 excepted estates under the old rulesthose estates that fell just below the inheritance tax threshold of between 240,000 and 275,000. I acknowledged quite readily in my opening remarks that the compliance burden on those estates has been reduced, by allowing them to complete the shortereverything in terms of Inland Revenue forms is relativeform, IHT205, rather than the full return form, which is IHT200.
	The right hon. Lady has deliberately ignored the fact that the definition of an excepted estate has been widened to include all estates above 5,000, which require probate. The practical effect is that, while 30,000 estates will enjoy a reduction in the compliance burden, some 270,000 estates, according to the most recent year's figures, will suffer an increase in the burden by having to make a return using IHT200.
	Contrary to what the right hon. Lady says, the minimum number of questions required is not set out. I have already listed the questions that must be answered: details of the deceased's occupation and surviving relatives; gifts that the deceased has made; pensions; assets overseas; cash, including money in the bank, building society and national savings; value of household and personal goods; quoted and unquoted stocks and shares; insurance policies; bonuses; mortgage protection policies; money owed to the person who has died; residences; partnerships and business interests; debts of the deceased; and funeral expenses. That is not the minimum information required.
	We understand the need for a return of information for estates that are just below the margin, but in broadening the scope of excepted estates under the 2004 regulations to include all estates that require probate which are below the inheritance tax threshold, the right hon. Lady has, deliberately or otherwise, swept into the net hundreds of thousands of very small estates and created a huge new burden, however she seeks to dress it up today.
	By interchanging the old definition of an excepted estate, which refers only to the 30,000 estates just below the IHT threshold, and the new definition, which includes some 300,000 estates that require probate and are below the IHT threshold, the right hon. Lady has effectively thrown up smoke around the debate, but she has not answered the challenge that we have put to her.
	The right hon. Lady says that all that is being asked is that people make a return to show they have done the calculation. Of course people must do the calculation before asserting that an estate is not chargeable to taxa prudent person would always expect to do sobut sadly, for many small estates people will not have to spend very long computing whether the estate is worth 275,000; the question will be whether the estate is worth 10,000 or 12,000. In those cases, the imposition of completing such a form is an unnecessary and onerous burden at what will be a very difficult time for bereaved families dealing with these matters. I intend to ask my hon. Friends to support the new clause in the Division Lobby.

Question put, That the clause be read a Second time
	The House divided: Ayes 181, Noes 276.

Question accordingly negatived.

New Clause 4
	  
	Tax Law Commission

'(1)   The Treasury shall prepare and present to Parliament a proposal for the establishment of a Tax Law Commission, to act in parallel to and to complement the work of the Law Commission.
	(2)   The Tax Law Commission shall have as its purpose the bringing forward of proposals for the review, modernisation, improvement and simplification of the tax law of the United Kingdom.
	(3)   The report shall have regard to all factors that seem to the Treasury to be relevant following consultation with any bodies appearing to Her Majesty's Revenue and Customs to have an interest in tax law reform.
	(4)   The report shall be presented to Parliament by 31st July 2006. [Mr. Mark Field.]
	Brought up, and read the First time.

Mark Field: I beg to move, That the clause be read a Second time.
	As Paul McCartney and John Lennon might have said, we are now reaching the end of the long and winding road of this second Finance Bill of the year.

John Healey: When was it No. 1?

Mark Field: The song was No. 1 in the US in 1970, but that is another matter.
	This complex and highly technical Bill is once more before the whole House, but the sparsely occupied Chamber means that it would be stretching credulity to suggest that Parliament is actively considering each and every aspect of the Bill. That is not to say that there has not already been careful consideration during the lengthyish Committee sittings. Our debate was sometimes heated, and on occasions that had little to do with the generally clement summer weather.
	Her Majesty's Opposition have benefited from comprehensive briefings from an array of interested parties, including the Law Society, the Association of British Insurers and the Chartered Institute of Taxation. They have all provided us with useful ammunition with which to put forward our case as gamely as possible, given the circumstances.
	As I said, we are considering the second Finance Bill to come before Parliament this year. The intervening general election provided us all with a welcome respite from endless Committee sittings and gave the Government an opportunitya relatively small one, admittedlyto make minor amendments to their original proposals. I understand that tax practitioners have breathed a collective sigh of relief, not because of the apparently mouth-watering prospect of a second Finance Bill in a year, but because of their satisfaction that this year the Chancellor of the Exchequer has spared the tax practitioner fraternity from a Finance Bill such as that of 2004, which weighed in at a record-breaking 637 pages.
	New clause 4 stems from concerns that have been widely expressed about the growing complexity of our tax laws. The amount of legislation grows greater and faster and let us be in no doubt that that is true of not only primary legislation, but the plethora of statutory instruments that appear with breathtaking frequency throughout the year. We hope to establish a tax law commission that would mirror the Law Commission and review and modernise UK tax legislation.
	As the Minister will be aware, I am a relative newcomer to Front-Bench Treasury affairs and I have had something of a baptism of fire. This highly technical Finance Bill and the Regulation of Financial Services (Land Transactions) Bill have certainly kept me busy over the past month. I have no complaints about that, but in addition to grinding through legislation line by line, I have seen an ever-greater amount of guidance material, such as statements of practice, tax bulletins, concessions and frequently asked questions.
	It is perhaps ironic that, in moving new clause 4, I need first and foremost to acknowledge the tremendous assistance that I have received from the indefatigable John Whiting, the tax partner with PricewaterhouseCoopers and past president of the Chartered Institute of Taxation. Without his help, I fear that even this new clause might never have seen the light of day. Although I do not detect too many tears at that prospect from either the Government Front Bench or, dare I say, their nearest and dearest in the civil service, it is important to put many concerns on the record during the course of what I suspect will be a brief debate.
	A great deal of the seemingly exponential growth of the raw material that makes up our tax laws is clearly due to the increasing complexity of life and business. However, at the same time the tax authorities doubtless argue that they need continually to endeavour to plug what would otherwise be loopholes that could be exploited by tax planners and avoiders alike. A commission for taxation along the lines that we have set out would solve four main problems.
	First, the commission would address complexity. UK taxation is meant to work along fairly simple principles: all employment income is subject to pay-as-you-earn and national insurance contributions; companies are taxed on their accounting profits at 30 per cent. after certain adjustments, or less if they have profits of less than 1.5 million in any year; stamp duty land tax is at 4 per cent. on property sales; and VAT on the supply of goods and services is generally levied at 17.5 per cent. How difficult should it be to enact tax law on the basis of those straightforward and simple principles? One needs only to witness the flat tax regimes of most Baltic states to realise that it should be relatively straightforward.

Edward Balls: Was the hon. Gentleman on the trip?

Mark Field: I hasten to add that I was not on the trip, although I am sure that one could be arranged at some time in the future. I am glad that the Chancellor is not in the Chamber to hear me say that.
	The UK Government have created a great collection of legislation that makes this country's tax regime one of the most cumbersome in the world.

Stephen Hesford: Subsection (2) of new clause 4  outlines the purpose of the putative tax law commission, but I cannot see anything about tax avoidance. Does the hon. Gentleman think that any review of the tax laws should take account of tax avoidance?

Mark Field: I was rather hoping that the hon. Gentleman might have been the chairman of the all-party group on Estonia or something. Let me answer his point seriously. There is little doubt that much of what has been discussed during the consideration of the Billand previous Finance Bills, I suspecthas related to tax avoidance and ways in which we can try to find a balance between legitimate tax planning and contrived tax avoidance. The new clause would create an independent tax commissionthat is importantand tax avoidance would be dealt with head on by the Treasury.

Edward Balls: I hesitate to ask whether the new clause is an excuse for further trips to Estonia to build broader support for possible flat tax proposals. However, putting that to one side, do we not already have a tax law rewrite project? My memory is that that project, chaired by Lord Howe of Aberavon, would regularly send voluminous reports to the Government for consideration and that many of them would be taken into account when drawing up Finance Bills. Is the hon. Gentleman saying that the current tax law rewrite project is not doing a satisfactory job, or that he would like his commission to go beyond the remit of that project and start making policy, rather than just trying to simplify tax legislation and make it more effective?

Mark Field: The hon. Gentleman makes an entirely legitimate point. I shall address specific aspects of the tax law rewrite project later because it has not achieved quite as much as we might have hoped.
	Someone needs to stand back and realise that when UK legislation on direct tax is bursting out of some four volumes of statute, something must be inherently wrong with the approach on writing and reforming tax legislation. It is worth noting several facts, such as the sheer number of personal tax returns that are filed incorrectly or late. A National Audit Office report last year said that such returns accounted for some 29 per cent. of all PAYE codings. The last consolidation Act on tax goes back 17 years to 1988. Government Members make a meagre contribution to Committee debates on Finance Bills, which makes it difficult to suggest that there has been full consultation on such matters.
	Since 1997, the Government have introduced major new taxation policies on intangibles, share schemes and other employee-owned securitiesthey have done that several timesstamp duty land tax, the climate change levy, tonnage tax, IR35, transfer pricing, windfall taxes, derivatives, VAT grouping, international financial reporting standards, double tax relief, general insurance and substantial shareholdings. They have changed the date of payment of tax and introduced new policies on the taxation of pensions and enterprise investment schemes. Therefore, complexity is key to our concern and we hope that a tax law commission would rectify that.
	Secondly, the constant change has led to a lack of certainty. It is hard for business to plan when the UK insists on a near constant rewriting of its tax law. We should also note that the UK is in almost isolation from other highly developed economies in not have a binding advanced clearance regime. That was discussed in detail in Committee and I do not wish to reopen the debate, but it is a concern.
	Without necessarily opening the door for contrived tax avoidance schemes, the element of certainty that comes with an advanced clearance scheme should be reimposed in tax legislation. That would enable the tax treatment of, for example, an innovative new banking product to be pre-determined, not just to give customers certainty, but to ensure that customerswhether they are smaller individuals or large institutionshave confidence. It would enable us to ensure that the two major financial centres in the UKthe City of London and Edinburghdo not lose business in what is an increasingly globalised financial world.
	I also hope that the scheme would enable groups to confirm the tax treatment for transaction planning and the treatment of debt borrowing, for example. Despite having a mountain of tax legislation, there is no procedure to get pre-transaction rulings. That often means that UK businesses and customers are encumbered with a tax risk in their balance sheet and in their operations that their overseas competitors do not have.
	Thirdly, there is the relative ease of unintended tax planning opportunities, which Ministers might simply regard as the creation of contrived tax avoidance schemes. A simpler system makes it harder to avoid tax. The Government's insistencesome of this is a carry-through from tax law passed by the last Conservative Administration, notably the financial instruments and loan relationship legislationon writing complex prescriptive legislation has meant that they have been an effective creator of tax loopholes.
	Let us take the stamp duty land tax. Schedule 10 deals with legislation that was introduced as recently as 2003. Much of the Finance Act 2002 of only three years was dedicated to removing tax planning that followed on from the problem of too many specific rules in loan relationship and derivative legislation. I accept that much of that is highly complex, but by the same token that complexity has to a large extent opened the door to more tax planning opportunities. Intangibles legislation has been changed twice since 2002, following the clampdown on avoidance. Insurance company rules written as recently as 2003 were changed in 2004as Ministers will know, because I mentioned it in Committee only last weekto deal with avoidance-related matters.
	Fourthly, there is the lack of transparency. Transparency is of key importance in any taxation system. A complex system inevitably becomes an opaque system for anyone other than those who are experts in the field. How can taxpayers predict and financially plan how much tax they pay when much of it is hidden and the system is in a constant state of flux? While the basic corporation tax rate is 30 per cent., our corporation tax yield is comparatively high. As a result, the Institute for Fiscal Studies feels the need to publish journal articles entitled Why has UK corporation tax raised so much revenue? As Ministers will be aware, this year alone we are expecting a substantial increase of 28 per cent. in corporation tax additional receipts. Much of that relates to a widened tax base, accelerating the time when the tax gets paid, which acts almost as a windfall tax in the year of change, and also to the long time over which UK companies get tax deductions for capital expenditure on plant and machinery as well as intangibles.
	There is also considerable confusion, which is increased by schedule 2, about what is a securities issue by way of salary taxable at up to 40 per cent. We had long debates about employment securities matters in Committee. We have to ask, what are the securities owned by an employee in its employer by way of investment that will be taxable at as little as 10 per cent.? The Government have rightly been proud of some of their changes to encourage entrepreneurism, such as the idea that capital gains tax can be as little as 10 per cent. once various considerations are taken into account. I applaud them for those sensible changes. However, they give with one hand and take with the other. Many changes have not worked as well. There is a tendency to define a large amount of capital gains as income so that it qualifies for higher tax rates.
	We lack a mechanism for taking stock of our tax codefor testing rigorously whether it is ready and fit for purpose. There is no attempt to modernise or to get rid of the unnecessary, thereby showing that some parts could be dealt with more simply and might even be more effective. Although I accept that the Government took on board some of our concerns and those of the insurance industry, we rarely have sunset clauses to lay down either an expiry date for a new rule or at least a time when the usefulness, or otherwise, of the rule would have to be reviewed.
	Regulatory impact assessments can be supplied with clauses, but when are they reviewed to see if their estimates hold true? That is partly down to the Opposition's scrutinyI accept some blamebut we all have busy lives and the world and the tax bandwagon move on. We need to determine whether any new law represents value for administrative money. One of the ideas is that a tax law commission would alert itself to many of those concerns.
	As the hon. Member for Normanton (Ed Balls) said, there is the tax law rewrite project. It is doing some good work, but it is purely a rewriting of the law rather than an assessment at the outset of whether a particular type of legislation will best achieve an intended result. It does not attempt to change the rules in any way. If odd points that seem otiose are found, or pointers suggest that things could be improved, they are logged, but they must be dealt with through the general Finance Bill process.
	The Law Commission has as its aim, in simple terms, the review and modernisation of the general law of the UK. It does not believe that its writ runs to tax law. We should at least ascertain what benefits would accrue by having such a body to deal with tax law, and that is the underlying aim of the new clause. It would not impose a tax law commission, suggest ways in which such a body should be set up and run, or set out in detail its remit. All that would be premature. The aim is to review whether such a body would be advantageous. If the report established by the new clause suggested that it would be, Parliament would commission the next steps, which would presumably include how it might be staffed and controlled and its constitutional position. We have a template of the Law Commission, and I assume that the new body would be of a similar nature.
	It is worth noting that the tax law review committee published a report in March 2003, with the exciting title of Making Tax Law. The working party, under the chairmanship of Sir Alan Budd, examined the parliamentary process for the enactment of tax legislation.

Mark Tami: It passes the simplicity test.

Mark Field: Yes, the title passes the simplicity and certainty test. Of that there can be no doubt.
	The working party's report would be germane to the report mentioned in the new clause. Also, the Chartered Institute of Taxation has proposed the idea of a tax practice committee, which would, in concept, have three main functions: first, the oversight of the consultative process for new tax laws to ensure that new laws are properly consulted on, subject to anti-avoidance constraints; secondly, the proposing of sections of existing tax law in need of review; and thirdly, oversight of the tax law rewrite project.
	The tax practice committee is envisaged as being a group that is drawn from all those involved with the taxation processthe professions, business, tax authorities and, hopefully, academia. As part of the review, commentators have called for the House of Lords to be given a greater role in the scrutiny of Finance Bills. I appreciate that that is a controversial ideait was last tried 95 years agobut it is an interesting proposal. For historical reasons, the House of Commons has had sole charge of money Bills since the Budget of 190910, but a second revising Chamber would have a part to play in improving the way in which tax law is maintained. We hope that that change could take place during the course of this Parliament.
	It would be wrong to ignore the role that the other place could play. It has plenty of expertise, which would be useful in the consideration of tax changes, as one or two Ministers have realised in previous debates. The Lords cannot currently alter a money Bill and I am not seeking to go down that path. It was intriguing, however, to see the establishment last year of a Sub-Committee to look at administrative aspects of the Finance Bill. Its remit may be narrow, but we may wish to build on that. I accept the sovereignty of the Commons in matters of taxation. [Interruption.] I do not have much choice, I am afraid. It is time, however, to look again at the way in which tax law is put together and how we operate under the paramount rule of the Commons in this area.

Edward Balls: I am trying to understand the nature of the hon. Gentleman's proposal. In the case of the Bank of England, we decided that independence was the right thing. In the end, with the support of Opposition Membersit took a little timewe decided that it was right to hand over the power to take month-by-month interest rate decisions to a group of independent experts. There is a material difference, however, between making monetary policy decisions with a single instrument and a single target and tax policy decisions. The hon. Gentleman is proposing to move tax policy decision making away from the House of Commons and elected Members of Parliament and instead asking independent experts to make policy decisions about tax. Is he proposing that Parliament should give up power in that way, not merely to unelected Members of the other place but to entirely unelected individuals?

Mark Field: The hon. Gentleman has misunderstood what we are trying to achieve. We think that establishing such a commission is a sensible way forward, given the sheer amount of taxation legislation and the fact that little of it is regularly reviewed. That does not mean that policy matters would be in the hands of that body. Its remit would be determined once it has been set up. No one would suggest that law policy should be made by the Law Commission. It makes recommendations about changes in the law and assists the Commons and another place to initiate debates. The Law Commission influences the agenda on an independent basis, and I envisage a tax law commission operating in the same way. However, there is a great distance between that proposition and the proposition that policy decisions should be made by such a commission.
	I understand the concerns that have been set out, but I hope that the broad proposals that I have tried to set out will lead to a debate on the matter. Whatever route is eventually taken, the new clause aims to highlight the need for a mechanism for a proper review of our tax law.

Christopher Huhne: I support the proposal for a tax law commission. If we had some weighing scales and put the current tax statutes on them we would find that there has been an increase of almost 50 per cent. since the influence of the hon. Member for Normanton (Ed Balls) began to be felt in the Treasury in 1997. I cannot believe that he thinks that the increase has had the desired effect. I accept that there is a tax law rewrite project, which has the desirable goal of helping to simplify matters, but the Liberal Democrats do not want policy to be determined by anyone other than elected Members of the House of Commons. However, the great ship of tax statute has become so barnacled that a short spell in dry dock with a good amount of scrubbing and cleaning is thoroughly desirable. The attempt to simplify, modernise, review and improve tax statute is an experiment that is worth trying. The Liberal Democrats therefore support the proposal. I hope that Government Members who are aware of the extent of tax statutes will do the same.

Edward Balls: I noted the hon. Gentleman's seeming agreement about the commission with the members of the Opposition party

Richard Spring: The Conservative party.

Edward Balls: I was trying to work out whether I could say that or notthe learning experience is hard. Does the hon. Gentleman also agree with the Conservative proposals on expanding the role of the House of Lords to scrutinise and interfere with tax policy?

Christopher Huhne: The hon. Gentleman will know that our proposals for changing the role of the House of Lords go rather further, and start with a directly elected Chamber. I hope that he will have the opportunity to support them at some point. However, in a second-best world, the proposal to establish a tax law commission is a useful attempt to deal with the simplification of tax statutes. The Liberal Democrats usually sign up to campaigns such as Quash a Quango, so the hon. Gentleman might find it ironic that we are recommending the establishment of a quasi-autonomous non-governmental organisation.

Helen Goodman: Has any consideration been given to the appointments system for the future tax law commission?

Christopher Huhne: The hon. Lady will see that the new clause would give the Treasury the opportunity to present details of the way in which the commission would work. I can see that the Paymaster General is warming to that excellent idea.
	The hon. Member for Cities of London and Westminster (Mr. Field) was clearly attempting to spin things out to allow time for the hon. Member for Runnymede and Weybridge (Mr. Hammond) to return from lunch and introduce the next item on the agenda, but it is not necessarily right for me to participate in that game. We have dealt with the main objections to the new clause and the Liberal Democrats will support it.

Theresa Villiers: I appeal to the House to support new clause 4 for common-sense reasons. We have an excellent Law Commission, but there is no rational explanation for having a commission that examines all laws except tax law. Why is tax law so different that the Law Commission's excellent record should not be applied to it? Can the Government explain what is so distinctive about tax as to justify that gap, when the rest of the law is covered by the process of review, rationalisation and simplification undertaken extremely well by the Law Commission?
	As we have heard, one of the main advantages of setting up a tax law commission is that it could assist in the simplification of our tax law. The increasing complexity of tax is one of the major weaknesses in the Government's economic policy. I admit that it is not an issue that people are talking about on Barnet high street, but the complexity of our tax system is now doing significant damage to our economy.
	The Chancellor has tended to use the tax system far too much for micro-management, to try to pick winners in terms of economic growth, and for social engineering. This has increased the complexity of the system exponentially since his stewardship of the economy began in 1997. That complexity has been compounded by the need to correct previous legislation, and by the Chancellor's attempts to hide the number of tax increases that he has chosen to inflict on the British public.

Stephen Hesford: I am following closely what the hon. Lady is saying, but as the hon. Member for Cities of London and Westminster (Mr. Field) said, the tax law commission, if it came into existence, would not deal with policy. Does she agree that it therefore would not deal with her suggestions about social engineering and the like, even if the House accepted that as a proposition, because that is policy, not tidying up.

Theresa Villiers: It is always difficult to draw a clear line between technical changes and policy, but the commission would make recommendations, they would be debated in the House and we would decide whether we wanted to go in that policy direction or not. It is as simple as that. The commission would make recommendations to simplify the system.
	The tax system of any modern economy will be complex, but ours has reached heights of Byzantine complexity. The Finance Act 2004 holds the record for being the longest, with 328 sections and 42 schedules. The standard textbook on tax law hits the bookshops as a behemoth of about 11,000 pages. We need to address the problem urgently for a number of reasons, the first of which is lack of transparency, which my hon. Friend the Member for Cities of London and Westminster spoke about.
	Complexity is such that the tax system is incomprehensible to the vast majority of ordinary people, and fairly unintelligible even to the most numerate of taxpayers. That is damaging for our democracy. People should be entitled to understand with clarity how much they are taxed, why they are being taxed and on what they are being taxed. Complexity also increases costs for taxpayers: it is costly for them to get the professional advice that they need to complete their tax returns and the paperwork needed to ensure that they are paying the correct amount of tax. The taxpayer suffers a double hit, because the public purse is put under pressure by the need to employ more civil servants and bureaucrats to tackle the complexity of the system.
	Ministers will no doubt say that detail and the dense text of our tax law is needed to give certainty. In fact, complexity can lead to less certainty as people find it increasingly difficult to understand the tax system. That is made worse by the Government's refusal to accept any form of pre-authorisation scheme, as urged on them by the Opposition. Furthermore, complexity can produce more opportunities for aggressive and artificial avoidance mechanisms. The more complex the system, the more places there are to hide. That leads to more complex anti-avoidance provisions, producing a vicious circle of complexity.
	A complex, opaque and uncertain tax system deters foreign investment and drives jobs offshore in a globalised economy. A simplified, rational, coherent tax system is a magnet for jobs and employment, so our competitiveness is under threat from a tax system that is overly complex. Lastly, tax simplification will enhance our democracy.

Edward Balls: I agree wholeheartedly with the hon. Lady's desire for greater scrutiny, understanding and public debate about tax matters. I commend to her membership of the Standing Committee that considered the Finance Bill. All members of the Committee and people in the Public Gallery had the opportunity to understand and scrutinise in a transparent way tax policy decision-making, which was most illuminating. The hon. Lady said in answer to my hon. Friend the Member for Wirral, West (Stephen Hesford) that it was impossible to distinguish clearly between technical aspects of tax policy discussion or cleaning up, and policy decisions. Given her point about democracy, does she accept that because of that ambiguity, if we were to accept the proposal for a commission, it would mean that scrutiny of policy decisions would move from the House to the commission?

Theresa Villiers: No, I do not accept that at all. I repeat my response to the other intervention on the matter: the House remains sovereign on tax matters. Whether there is a tax commission or not, we are the sovereign body. We can accept the commission's advice or reject it. I believe that simplification will enhance democracy because it will make our scrutiny process much easier and much more effective.
	In a recent paper for the Centre for Policy Studies, the distinguished tax lawyer David Martin described our tax law as obscure and ramshackle. The Institute of Chartered Accountants described our tax system as spiralling out of control. The complexity of the system is making it increasingly difficult to ensure effective, democratic scrutiny. As I said, every citizen is entitled to understand why they are being taxed, on what they are being taxed and how that tax is calculated. Our amendment will bring a little closer the day when that is true. That is why I commend it to the House.

Stephen Williams: I had not intended to speak, but I shall contribute briefly to the debate. Among the Members present, I probably have the unique experience, having spent the past 15 years in the profession, of seeing Finance Bills from the other side of the fence, and for the past month or so of seeing how the Finance Bill is put into practice as a legislator.
	With every Finance Bill that is published, various institutes have to publish commentaries. My own institute, the Chartered Institute of Taxation, will shortly send, with a large thud through my letterbox at home, a commentary on the present Finance Bill when it is enacted. The Treasury publishes its explanatory notes, and we all miss the presence of the hon. Member for Wolverhampton, South-West (Rob Marris) to point out aspects of the notes to us. Many other bodies and individuals will offer expert commentaries on the Bill.
	Earlier speakers referred to the remit of the tax law rewrite committee that has been established for some time. As I understand it, the committee's original remit was to render into plain English the existing body of tax law. If the committee came across inconsistencies in the English while it was doing that, it would point them out, but its remit was not to rewrite the meaning of that tax law.
	From what the hon. Member for Normanton (Ed Balls) was suggesting, this proposal is quite different. In no way does it conflict with the work of the tax law rewrite committee. There is a need for some standing commission to examine tax law as it accumulates with every Finance Billthis year there have been three, in totalto make sure that the legislation that we have in place works for a modern 21st century economy.

Patrick McFadden: In the absence of my hon. Friend the Member for Wolverhampton, South-West (Rob Marris), perhaps as his neighbour I could take up the baton. There seems to be a parallel discussion taking placeon one side about complexity and on the other side about a commission. The new clause calls for proposals for review, modernisation and improvement, as well as simplification. Surely with such a remit, we would be establishing a system with two masters, which would lead to more complexity, rather than less. What is it about the establishment of a commission that will deal with the parallel discussion about the complexity of a system?

Stephen Williams: I am sure that this House is very jealous of its privileges and would always be the master, as the hon. Gentleman puts it, of tax legislation. We already receive representations from many outside bodies. It has been abundantly clear to me as I have witnessed the Bill's progress through the House, including in Committee, that Treasury Front Benchers, prestigious though they must be in matters of tax law, rely heavily on the Box for their advice. Conservative Front Benchers rely heavily on professional advice, as the hon. Member for Cities of London and Westminster (Mr. Field) acknowledged. I felt sorry for my hon. Friend the Member for Eastleigh (Chris Huhne), because the hon. Member for Cities of London and Westminster read out the briefings so well that my hon. Friend had little left to say. We should recognise that we already rely on many people from outside who contribute to the formulation of our tax law. As politicians, we are all generalists and amateurs, and we need as much help and clarification as we can get from outside bodies and experts to improve the quality of legislation on the statute book.

John Healey: We have had a good debate on the new clause. I particularly welcome the contributions by my hon. Friends who served on the Standing Committee and have come back for more this afternoon.
	The hon. Member for Cities of London and Westminster (Mr. Field) introduced his new clause with such a wide-ranging speech that I thought that we had suddenly moved on to the Third Reading debate. He sparked an interesting succession of points about the role of the second Chamber, if any, in finance legislation. He said that that chamber has extensive experience; it does indeed, and it is based on extensive interests. However, I utterly reject the proposition that a non-elected chamber should have a role in any tax matters, tax scrutiny or tax policy decisions. That would overturn a centuries-old principle of this House. The hon. Member for Cities of London and Westminster should be aware, in making sometimes fairly light comments, that the financial privilege of the Commons dates back to the 17th century.

Christopher Huhne: The Minister may be aware that as new clause 4 makes no mention of the other House having any overview of tax legislation, this is a tremendous red herring. Only the extraordinary forbearance of Madam Deputy Speaker has allowed us to trespass so far off the beaten track. I hope that he agrees that a tax law commission has nothing to do with the powers of the House of Lords.

John Healey: I am not sure that the hon. Gentleman is following the debate as well as he has followed the written advice that the professional bodies supplied for it. I am responding to the points that were raised during a fairly wide-ranging debate.
	The hon. Member for Cities of London and Westminster asserted that tax matters should be determined only by Members of this House, but that directly contradicts the new clause and the sentiments that underpin it.
	The hon. Member for Chipping Barnet (Mrs. Villiers) made an interesting contribution to the debate and spoke very fluently for a new Member. She expressed concern about the competitiveness of the British economy and tried to harness that to an argument in support of the new clause. She may not be aware that independent surveys consistently show that the UK has among the lowest administrative burdens for business in the world. This year, the World Bank published a survey that showed the UK to be top of the league of major countries in terms of regulatory quality.
	I turn specifically to the simplification of the tax system, which is a regular subject of debate in this House and elsewhere and has been recurrent theme in our proceedings on the Bill in Standing Committee and at other stages. Most people want a tax system that is simple but also certain, efficient, competitive and fair. Certainty is particularly vital when it comes to matters of, and decisions about, tax. The Government want a tax system that contributes towards a stable economy, helps to raise productivity, increases employment opportunities for everyone, and helps us to build a fairer society. We need to strike a balance between all those things while ensuring that the system remains manageable.
	That said, we are always keen to simplify where we can, where that can be done consistently with our other policynot technicalobjectives for the tax system. That can be particularly difficult when maintaining tax yield is of central importanceas it is for any Governmentbecause anti-avoidance measures may always also be needed. Many of the complexities in the Bill, which other Finance Bills have had to include, are a direct result of the complexity of the schemes that the tax planning industry suggests to its clients as ways of avoiding the tax that their clients should be paying.
	The hon. Member for Cities of London and Westminster dwelled on the work of the tax law rewrite project, which, despite his somewhat lukewarm description, is a very substantial piece of work: it has rewritten income tax Acts. It has drawn high praise from the professional bodies that brief the hon. Gentleman and his colleagues on the Bill, and from employers' organisations such as the CBI. Its benefits are clear: less time needed to get to grips with legislation and fewer errors caused by misunderstandings of legislation; fewer issues on which time needs to be spent obtaining specialist advice; fewer queries about interpretation; and fewer disputes with Her Majesty's Revenue and Customs about the meaning of legislation. In due course, better legislation can lead to better taxpayer guidance.
	The project has produced three Acts and rewritten the pay-as-you-earn regulations. Its work continues and further legislation is in prospect. The next Bill will comprise the third and final Bill on income tax, and the following Bill will cover a large part of the corporation tax system. As the hon. Member for Cities of London and Westminster recognised, it is a project that has consistently had all-party support. It was set up under the right hon. and learned Member for Rushcliffe (Mr. Clarke) when he served as Chancellor, and has been ably chaired by Lord Howe of Aberavon. The project makes the law clearer and easier to use. That may not be regarded as simplification in its fullest sense by all parties, but the law should be simple to understand and practical to comply with, and that is precisely the impact of the project's work.
	In addition, we have made many substantive improvements and simplifications to the tax system. I will not prolong the debate significantly by listing them.
	Let me be clear that the Government recognise that complexity can bring additional costs and burdens on taxpayers. We are committed to a tax system that keeps the burden of regulatory requirements to a minimum, and we take every possible opportunity to reduce that burden, particularly on small businesses. That is why the new HMRC has a specific remit from the Chancellor to reduce the tax system's administrative burden on small firms.
	The hon. Member for Cities of London and Westminster said that regulatory impact assessments were never followed up and that the Government never reverted to them to check their accuracy or the cost that a specific measure had imposed in practice. My right hon. Friend the Paymaster General and I gave evidence to the Treasury Committee when it examined those issues last year. When it considered tax compliance cost, we set out the RIAs' post-implementation reviews, which it was keen to study. They have been conducted in consultation with outside interests and subjected to external scrutiny. I hope that the hon. Gentleman will reflect on his earlier comments when he reads those reports.The merger of the Inland Revenue and Customs and Excise gives us the opportunity and scope to build further on the work that we have already completed.
	The hon. Gentleman knows that any Government maintain a constant and continuous review of the tax system. For us, that includes the objectives of modernisation, improvement and simplification of tax, as well as the reduction of administrative burdens. The process benefits from regular and effective consultation with all the interested parties. There is therefore no gap, as the hon. Member for Chipping Barnet argued, in the system.
	New clause 4 would trigger a further review process, conducted by a new commission. That would add little, and would duplicate something that is probably the task of Government. It is unnecessary and inappropriate to franchise out that task to a separate body.
	The Government are already simplifying the tax system and we have set out our objectives for the tax system. We report regularly on progress against those objectives and consult widely across the spectrum on a range of issues. It is the fundamental job of Government to do that, and we are held to account for it. I hope that the hon. Gentleman will not press the new clause to a vote. If he does, I shall have to ask my hon. Friends to reject it.

Mark Field: I suspect that consideration of clause 4 always brings out a certain sensitivity in Labour Members. However, I thank the Financial Secretary for his considered reply.
	As ever, my hon. Friend the Member for Chipping Barnet (Mrs. Villiers) made an excellent contribution based on her great experience as a Member of the European Parliament. She rightly stressed the uncertainty and complexity that has crept into domestic tax law. Let us be honest: that has not happened only in the past eight years; the problem goes back many years. However, as I said earlier, there has been no consolidation measure since 1988.
	I thank the hon. Member for Eastleigh (Chris Huhne) for his support. I must make a small confession about his somewhat belated entry into the House. I first voted in the 1983 general election when I lived in my home town of Reading. The constituency was Reading, East and the SDP/Alliance candidate was none other than the hon. Gentleman. Four years later, when I was at university in Oxford, in the constituency of Oxford, West and Abingdon, the hon. Gentleman was also the candidate. I hope that he will not move to the Cities of London and Westminster because that would make it a hat trick.
	I thank the hon. Member for Bristol, West (Stephen Williams) for his brief contribution, despite his exposure of the fact that not all the thoughts that I expressed were entirely mine.
	I accept the Financial Secretary's comments about the second Chamber. My remarks were slightly obiter dicta. I simply tried to speak a little about modernising the House of Lords and part of the contribution that it could make. I did not suggest that it could do fundamentally more than perhaps consider aspects of financial and tax legislation. However, I accept that many of the concerns that we have expressed go back beyond 1910. I know from my role as Member of Parliament for the City of London about the privileges that exist to this day in the City. In this place, they relate to financial power having moved away from only one side of Parliament.
	I accept that complexity is a two-way street. Inevitably, accountants, tax advisers, lawyers and so on have a large vested interest. However, the Financial Secretary rushed too quickly over my earlier point that the obscurity and complexity of many new laws and regulations on tax encourage avoidance.
	Conservative Members believe that it is high time for a review, although I accept the good nature of earlier comments. I therefore believe that we should vote on the new clause.

Question put, That the clause be read a Second time:
	The House divided: Ayes 194, Noes 289.

Question accordingly negatived.

New Clause 5
	  
	Inheritance Tax: Mitigation of Double Charges

After section 104 there is inserted
	104A (1)  This section provides for the mitigation to the extent specified, of double charges to tax arising in the circumstances specified (in subsection (2)).
	(2)   The specified circumstances are
	(a)   an individual ('the deceased') makes a transfer of value to a person ('the transferee') of property which comprises a debt owed to him by another ('the debt'), and
	(b)   the transfer is or proves to be a chargeable transfer, and
	(c)   the deceased dies on or after 31st July 2005 and within seven years of the transfer of value, and
	(d)   at the date of the deceased's death all or part of the debt has been written off, waived or released by the transferee or by any other person and such write off, waiver or release was made otherwise than for full consideration in money or money's worth, and
	(e)   that part of the debt which is written off, waived or released was before such event, represented by or was attributable to or its value was derived in part or whole directly or indirectly from, other property being relevant property within the meaning given in paragraph 21 or 22 of Schedule 15 to the Finance Act 2004, and
	(f)   the deceased is for the purposes of IHTA 1984 or section 102(3) Finance Act 1986 beneficially entitled immediately before his death to the relevant property or if not so beneficially entitled the relevant property was the subject of a potentially exempt transfer by virtue of section 102(4) of the Finance Act 1986, and
	(g)   the relevant property
	(i)   is comprised in the estate of the deceased immediately before his death within the meaning of section 5(1) of the Inheritance Tax Act 1984 and the value attributed to it is transferred by a chargeable transfer under section 4 of that Act, or
	(ii)   is property transferred by the potentially chargeable transfer to which sub-paragraph (f) applies, value attributable to which is transferred by a chargeable transfer.
	(3)   Where this section applies, there shall be calculated, separately in accordance with sub-paragraphs (a) and (b), the total tax chargeable as a consequence of the death of the person
	(a)   disregarding so much of the value transferred by the transfer of value of the debt (being the property to which paragraph (2)(a) refers) to the extent that the debt has been written off in accordance with paragraph (2)(d) above, and
	(b)   disregarding so much of the value transferred by the transfer of value of the relevant property (being property to which paragraph (2)(g) refers) as is represented by or attributable to the value of that part of the debt which has been written off, waived or released in accordance with sub-paragraph (2)(d).
	(4)   
	(a)   Whichever of the two amounts of tax calculated under paragraphs (3)(a) or (b) is the lower amount shall be treated as reduced to nil but subject to sub-paragraph (4)(b) the higher amount shall be payable.
	(b)   Where the amount calculated under paragraph (3)(a) is higher than the amount calculated under (3)(b)
	(i)   so much of the tax chargeable on the value transferred by the chargeable transfer to which paragraph (2)(g) refers as is attributable to the amount of that value which falls to be disregarded by virtue of paragraph (ii) shall be treated as a nil amount, and
	(ii)   for all the purposes of the 1984 Act so much of the value transferred by the debt to which paragraph (2)(a) refers as is attributable to the property to which paragraph (2)(d) refers shall be disregarded..'.[Mr. Philip Hammond.]
	Brought up, and read the First time.

Philip Hammond: I beg to move, That the clause be read a Second time.
	New clause 5 addresses an anomalyindeed, I might call it an injusticethat is estimated to affect about 30,00 people, and which we believe was not intended to arise. We recognise that there may be ways of achieving the relief that the new clause seeks other than amendment of the underlying primary legislation, but this is the route that we have chosen. I hope that I shall be able to secure a commitment from the Paymaster General, if not to accept the new clause as drafted, at least to provide relief from the double charge that I shall describe by whatever means the Revenue finds most appropriate, so that those 30,000 people can get on with their lives with some certainty about their position in relation to inheritance tax.
	If I might indulge in a little background history, the House will recall the closing of an inheritance tax avoidance scheme involving pre-owned assets in the 2004 Finance Act. The scheme, used by many families, essentially involved disposing of the family home while retaining the right to live in it. It relied on the creation of two trusts to avoid the rule that would make a transfer ineffective for inheritance tax purposes where an interestthe right to continue living in the housewas retained when the gift was made.
	Under the scheme, the house, rather than being given away, was sold to a trustlet us call it trust oneat an arm's length price in exchange for an IOU. Because that was an arm's-length market price transaction, it had no inheritance tax implicationsthe individual had simply swapped assets in the form of a house for an IOU. Then came the clever bitthe IOU was gifted to a second trust for the benefit of the donor's children, that being a trust in which the donor had no interest. Thus the gift of the IOU to the second trust became a potentially exempt transferif the donor survived seven years from the date of the gift, no inheritance tax would be payable. Of course, the gift of the house to the children's trust would also be a potentially exempt transfer, and if the donor survived seven years, no inheritance tax would be payable, but only if the donor retained no interest in the house. If the donor wanted to live in the house, that route would not work for inheritance tax purposes, and the use of the double trust device allowed the potentially exempt transfer benefit to be obtained while retaining a lifetime interest in the house for occupation.
	Let us be clear: that was a convoluted, although legal, piece of tax planning, prompted by the ever-widening net of inheritance tax. That tax was originally intended to capture the estates of the wealthy on death. The threshold has been allowed to reduce in real terms in relation to the value of the principal assets that make up modest estatespeople' housesto the extent that in my constituency and, I am sure, in many other parts of the country, an estate comprised solely of a three-bedroomed former council house will be caught by what has become the greatest stealth tax of all, a tax which, until recently, ordinary people did not have to bother themselves about.

Charles Walker: Does my hon. Friend agree that the tax at the current threshold penalises most people living in the east and south-east who might be on moderate incomes and have moderate homes? Does he believe that the original intention of the tax when introduced was to hit such people?

Philip Hammond: My hon. Friend makes two very good points. Clearly, it was not the intention of inheritance tax when introduced to hit the estates of modestly-off peopleit was a tax at death on the estates of the wealthy, and was originally conceived as a tax on land. Its scope is now far wider than was originally intended, and it has become one of the great stealth taxes, largely because of the rapid increase in house prices.
	My hon. Friend makes another excellent point: its incidence is not evenly distributed across the country because of the historic disparity in the rise in house prices and the level of house prices. People on average incomes in parts of the south-east, London and eastern England are likely to be caught by the tax, and people on average earnings in other parts of the country are much less likely to be caught by it, because of the less rapid escalation in the value of their housing assets. That is another aspect of the unfairness of using fiscal drag as a way of expanding the scope of a tax.

John Gummer: Does my hon. Friend therefore agree that, when the Government tried to block what it was perfectly reasonable to block, it was not acceptable that they did it retrospectively and then pretended that it was not retrospective? Its retrospectiveness lay in the fact that people who had done what was perfectly legal and what had been shown in the courts to be legal were then told that it would have to be undone, in circumstances that, by their nature, would be wholly different from the circumstances in which they had made the decision in the first place. Had they known that that was going to happen, they would not have made the same decision. That was blatant retrospectiveness.

Philip Hammond: My right hon. Friend is right. Those of my hon. Friends who have had the opportunity of serving on the Finance Bill Committee, and those who served on previous Finance Bills, will know that the Paymaster General will make a great case for the distinction between retrospectivity and retroactivity. She will say that the measure was not retrospective, although it was retroactive. I am afraid that the effect on the taxpayer is exactly the same.
	In the Finance Act 2005, the Government called time on this particular scheme, not by attacking inheritance tax planning directly but by levying an income tax charge on the value of the benefit from the retained interest in the house sold at arm's length to the first trust. That caused considerable anguish and anger because of the retroactive nature of the legislationimposing a new tax on a series of difficult-to-reverse transactions, some of which had been in place for nearly two decades when the measure was introduced. There was a large-scale gnashing of teeth at the time. Now that the dust has settled, most taxpayers accept that the game is up, and that the schemes that they have expensively set up have failed for the purpose that they set them up, and that those schemes should now be dismantled. That is what most taxpayers confronted with this new income tax charge want to do. Therein lies the problem that we seek to address with new clause 5.
	The Government action under the Finance Act 2004 was devastatingly effective. It completely removed the economic benefit of the schemes, and the Government's objective would be achieved by the dismantling of the schemes. Unfortunately, in doing so, the taxpayer is subject to a huge risk of a double taxation charge. The Government have provided a protected exit route from such schemes. Regulations under the Finance Act 1986 provide some protection against double charging, and regulations that were made earlier this year, under schedule 15 to the Finance Act 2005a measure targeted to deal with a problem that had already been recognisedprovide for those who have set up such a scheme to avoid the income tax charge by making an election, which essentially makes the whole establishment of the double trust transparent for inheritance tax purposes. The trusts therefore remain in place, but the house, notwithstanding its sale, is treated as a chargeable asset, and the relief is given on the lesser in value of either the house or the debt due from the children's trust on death. No double charge to tax would therefore arise.
	That is a de facto unwinding of the situation from an economic, not a legal, standpoint. It has been an effective way out of the mess for many ordinary middle-income families, leaving them bruised by the expense and stress of setting up and then unravelling the scheme but otherwise intact, while protecting the Exchequer at the same time by ensuring that the same inheritance tax is payable as would have arisen in the absence of the scheme.
	There are good reasons, however, why the election route under regulation 6 of the snappily named Charge to Income Tax by Reference to Enjoyment of Property Previously Owned Regulations 2005 is not an appropriate route for most people. First, the ownership of the property is left unchangedthe economics of the scheme are addressed but ownership is not, so that while the house will be charged to inheritance tax in the donor's estate, the debt, which has been gifted to the children's trust, remains in existence and will eventually give rise to a tax charge on the children who are the beneficiaries of the children's trust.
	Secondly, most people not unnaturally feel that, if they have come out with their hands up, unravelled the arrangements that they have made and accepted that they will remain liable to inheritance tax on their housethe asset originally intended to be protectedthere should not then remain in existence what is effectively a debt due from them to the children's trust that they have established.
	Thirdly, and perhaps most importantly, for technical reasons, an election under regulation 6 by a married couple will give rise to an inheritance tax charge on the first death rather than, as is normally the case with a married couple, on the second death. That does not alter the total inheritance tax due on the house, but it can cause serious cash-flow problems for the surviving spouse, and may possibly even require the sale of the house on the first death.
	That cannotat least, I hope it cannothave been the Government's intention. Given the problems that I have outlined, the obvious route for such people is to unwind the scheme rather than take advantage of the right to make an election under regulation 6. Unwinding the scheme would involve the trustees of the children's trust advancing the debt to the beneficiaries and the beneficiaries then releasing or writing off the debt due to them, so the position would revert to what it had been before. Mr. and Mrs. A would no longer hold the house subject to a debt but would be fully liable to inheritance tax on its value, while escaping the income tax charged on pre-owned assets.
	The difficulty is that, if either Mr. or Mrs. A, or both of them, die within seven years of the original gift of the debt to the children's trust, they face two lots of inheritance tax, one on the failed potentially exempt transfer represented by the gift of the debt and one on their share of the full value of the house. Two inheritance tax charges will be made on what is essentially the same economic value.
	Before this year's regulations were made, that problem also arose if people made an election under the Inheritance Tax (Double Charges Relief) Regulations 1987. However, regulation 6 of the 2005 regulations now relieves from a double taxation charge the estates of people who die within seven years of the original gift of the debt having made the election under regulation 7.
	Unfortunately, the same treatment does not extend to people who unwind arrangements completely. Our purpose is to seek a commitment to close that unintended trapat least, I hope it was unintendedfor unwary people seeking to comply with the changed rules by unravelling the schemes that they set up before the Finance Act 2004.
	New clause 5 seeks to amend the underlying primary legislationthe Finance Act 1986, under which the original relief was availableto address the circumstances that I have identified, by inserting new section 104A. In practice, that would extend to people who die within seven years of unwinding a scheme by writing off or releasing the debt, the same relief as applies to those making an election. It would do that by requiring two separate calculations of the tax duein respect of the debt and in respect of the houseand requiring the lower valuation to be reduced to nil, and the higher amount to be payable. Essentially, that is the same procedure as required under regulation 6 of the 2005 regulations for people who have made an election.
	Subsection (2)(d) of proposed new subsection 104A, providing that the double taxation relief would be available only if the release of the debt was being made other than for full-value consideration, would ensure that the new clause could not become a tax avoidance mechanism in itself. The relief would operate whoever released the debt. In the example that I have used, it would be the children who were the beneficiaries under the children's trust. The debt would have to be advanced to the beneficiaries, because only they could readily give a discharge of the debt from the settlor. The trustees cannot write off the debt, because to do so would confer a benefit on the settlor, who would have been excluded by the terms of the original trust deed when it was set up for the original purpose.
	For whatever reasonI suspect it is largely because of the pressure of the growing net of inheritance taxordinary people have been lured into complex tax planning by the iniquitous tax drift that has turned IHT into the biggest stealth tax. Retroactive legislation has been imposed on them, and most of them have now accepted that the schemes into which they entered are ineffective, and they want to unwind them, thus giving effect to the Government's intentions. However, they find that they cannot do so without incurring a real risk of double taxation which, even without taking into account the costs of setting up and dismantling the scheme, would leave them significantly worse off.
	We must not forget that, as my right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer) said, those schemes were perfectly legal tax planning when they were set up. Indeed, they remain so, although they have been economically neutered. Ordinary people seeking to comply with the changed rules should not be penalised by modest estates being put at risk of a potential 80 per cent. tax charge on the surplus value of the estate over the IHT threshold if both the debt and the house are charged to IHT.
	Even with the proposal for relief that we suggest in new clause 5, there would still be considerable downside risk for the taxpayer seeking to unwind such a scheme. First, a beneficiary of the children's trust will suffer inheritance tax if he dies within seven years of the debt being written off. Secondly the position for married couples who leave their property to each other on the first death, within seven years of the original gift, will remain unsatisfactory. For example, if Mr. A dies within seven years of the original gift of the debt, the potentially exempt transfer will become chargeable, even with double charge relief. On Mrs. A's death later, the full value of the house would become chargeable, so in effect, Mr. A's share will be taxed twice.
	Perhaps that will be sufficient to satisfy the Paymaster General's well-known penchant for putting into the tax system deterrents to legal tax planning. However, even with those remaining penalties, new clause 5 would greatly improve the position of the group of taxpayers who seek to unwind schemes and get on with the rest of their lives. I therefore appeal to her sense of compassion. Many thousands of people, the vast majority of whom will never have indulged in any form of serious planning before, and the vast majority of whom will have no wish to go near any form of tax planning ever again, have been caught in this trap.

Geoffrey Clifton-Brown: My hon. Friend is putting across a highly technical case very cogently. Does he agree that, because of the way in which the Government have treated inheritance tax, and the fiscal drag, some people who have bought their own council houses will now come within the IHT net? There is nothing wrong with arranging one's affairs to minimise tax payableand that is basically all that those people were doing. They should be allowed to unravel those schemes without having to pay a huge amount of double taxation, which is effectively a fine on taxpayers for arranging their affairs so as to pay the minimum amount of tax.

Philip Hammond: My hon. Friend is certainly right on the first count: as I said earlier, a modest three-bedroomed former council house in my constituency will certainly take an estate within the scope of inheritance tax. On his second point, there is a constant debate about the line between acceptable tax planning and unacceptable tax avoidance. That line is not clear or easily defined and those who have been involved with this Finance Bill accept that there are some difficult decisions to be made. In one sense my hon. Friend's comments are incontrovertible: people who have held up their hands and acknowledged that the game is up, and seek to unwind the schemes that they have set up in order to comply with the intention of the legislation, should not now be subject to an excessive penalty wholly disproportionate to the mischief in which they are alleged to have engaged.
	I think that that is wholly unintentional, because earlier this year the Government took steps to ensure that people who made elections were not subjected to a double tax charge. I have to believe that it is the Government's intention that people should be able to unravel and escape from these schemes without facing the double tax charge. I hope that the Paymaster General will be able to confirm that this afternoon.

Geoffrey Clifton-Brown: Is my hon. Friend aware of the old tax maxim that tax evasion is totally illegal, while tax avoidance is perfectly legal?

Philip Hammond: I would prefer to say that tax planning is perfectly legal. As our tax code has developed, the more convoluted forms of avoidance, while not illegal, are certainly subject to action by the Revenue. We have acknowledged during the Bill's passage that there is a constant game of cat and mouse. The Paymaster General expressed the view in Committee that she did not want to have to engage in a constant game of cat and mouse, but that, I fear, is the lot of Paymasters General, who are constantly pursuing a moving goal. Tax planning will move on and the Government and the Revenue will seek to close down the more convoluted and artificial tax-avoidance schemes. That is their right. The concern on this side of the House has always been about the degree of retroactivity in seeking to close down such convoluted tax-avoidance opportunities.
	I hope that the Paymaster General will be able to say something positive to this group of 50,000-odd people who simply want to get on with the rest of their lives, having recognised that what they did in the past was unwise and has certainly not delivered any benefit. Indeed, many families have been put through enormous stress, and we are not talking about wealthy individuals with complex affairs. Many are just ordinary families. Those people are now fearful of taking any action until the Revenue confirms that there will be no double tax charge. The longer the delay in releasing the debt and unwinding the scheme, the more income tax will have to be paid on the deemed charge equal to the value of the rent of the property that they continue to live in.
	In fairness to those ordinary families, I hope that the Paymaster General will be able to accept new clause 5. If not, I hope that she will at least confirm unequivocally at the Dispatch Box today that the Government will either amend the regulations or take appropriate alternative steps to allow those schemes to be quickly and effectively unwound so that there is an alternative route for those people for whom election under regulation 6 is not an appropriate exit. They should be able to unwind their schemes without undergoing the huge potential costs that the current regime imposes on them.

John Gummer: First, I would like to declare a disinterest in the sense that I have never created such a trust or been a beneficiary of one, so I believe that I can be perfectly objective about the subject. Secondly, I acknowledge that I have taken part in debates on these matters before and disagreed with the Paymaster General on her definition of retrospection. I retain that belief, but I took from that debate her genuine intention to ensure that people who had perfectly reasonably entered into a perfectly proper legal undertaking would be able at least to disengage themselves from it. Although that did not overcome the problem that they would not have made the initial decision all those many years back had they been told that the terms of the agreement would be subject to retrospection, it did at least solve the problem of retrospection in the sense that, previously, they were punished for finding themselves in their current circumstances. I agree with my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) that, since then, the Paymaster General has shown herself willing to try to maintain her position.
	I want to refer to three main points. First, it does not seem to me to be in any sense unpleasant to seek to allow one's children to live in the house in which they have been brought up, whereas I think that there is something wrong with a taxation system that does not view that as a natural activity. I believe that in most cases, if not all, people will already have paid tax on the money that they have invested in their houses. It is not as though they are perpetuating a non-taxable value: they have paid tax, spent money on the house and brought up their families in it. I have no difficulty in saying that there is nothing dishonourable whateverindeed, I think that it is very honourablein people wanting to allow their children to continue to live in that house.
	Secondly, we should accept that the increase in house prices has meant that many who live in houses that are now caught by inheritance tax do so in circumstances in which they are not themselves very wealthy. They are capital rich, but may not be that well off in current terms. The children who are to inherit the house often find, for the same reason, that it is the only chance that they will ever have to live in a house of their own. They may be financially involved in the house already and may have continued to live in the house with the objective of allowing their children, in turn, to live in it. It is neither wicked nor a mark of extreme wealth to seek to achieve such a sensible end. Indeed, it is often a mark of someone who has used his taxed income properly. That becomes even more important when people do not get any mortgage relieftax relief on the mortgage costs that people have to pay.
	Thirdly, many would say that a sensible tax regime would exclude the family house in any case. I personally take the Belgian view in believing that there should be no inheritance tax at all. I believe that it is the wrong way of taxing and that there are many preferable ways of doing so. I would replace it with something different, which is not at all unreasonable. It is clearly an attractive option because Belgium attracts a large number of French people to live under its tax system. For many people, the ability to hand on what they have earned to their children is much of the reason for earning it in the first place. It is a dangerous thing for a society that does not encourage such continuity and that sort of enterprise.

Geoffrey Clifton-Brown: My right hon. Friend is making a cogent contribution. Does he agree that many people nowadays have to work way beyond the retirement age in order to pay the mortgage on a very expensive house purely in order to pass it on to their children? If the fiscal drag that comes from the inheritance tax system continues, people may be thwarted in that aim and may well choose not to work for so long past their retirement age.

John Gummer: My hon. Friend makes an important point, but I do not want to follow too far down that particular road for this reason: I am not justifying my position on inheritance by virtue of the fact that high house prices have made what is inherently wrong more obviously wrong. I want to argue something much more fundamental, which is that a society that wants to encourage stability and enterprise is a society in which the ability of families to hand on money and a home is a crucial component of that stability.
	Those who believe in a property-owning democracy should not believe in a one-generation society. Those of us for whom the family is the most important element in our liveswho support marriage, want the state of marriage to be important, and want married couples to work together, so that their children can inherit from themshould be encouraged, not discouraged.

Charles Walker: My right hon. Friend has got to the nub of the problem. We, as Conservatives, believe that the family is the most important thing in people's lives, whereas Labour believes that it is the state.

John Gummer: That is not only true but self-evident. I do not wish to go down that line, but I do notice that whenever one talks about the importance of the family, of stability, of passing on what one generation has worked hard for, not a grimace but an expression of laughter appears on the faces of particular Labour Members. They laugh because they do not really understand what it is that has kept the nation stable over the generations, and which also motivates most people.
	Anyone of my age who asks their friends why they are still working will discover that they are doing so because they believe that it is contributing to the continuity of their family and to the well-being of the children and grandchildren whom they care about. A state that does not take that into account is very mistaken.
	This issue is important in the context of the new clause, and for two fundamental reasons. First, let us consider a situation in which someone has sought properly and in reasonable terms to make their affairs as least taxable as is proper within the regime, but who then finds that although they have done nothing illegalindeed, the courts supported their actionthey are penalised according to the vague view that everybody ought to pay as much tax as they possibly can, rather than as little as they are legally liable to pay. Such a situation undermines people's respect for the tax system. Asking people to find new ways in which to make themselves taxable does not constitute a proper tax system.
	A proper tax system recognises that although people have to pay the tax for which they are liablethey might choose to vote for a party that reduces taxthey should have no reason at all to fear that if they arrange their affairs so that, perfectly properly and legally, they pay less tax than if they had arranged them otherwise, they will be penalised, including retrospectively. I do not want to discuss retrospectivity, but I should point out that I realise that the Paymaster General, whose definition of retrospectivity is wrong in both dictionary and moral terms, does not want to turn retrospectivity into a punishment in this regard.
	I turn to the second and equally important issue. If people feel that they are no longer being treated fairly by the tax system, those who have always been law abiding will be less so. The fairness of a system is crucial to widespread support for it, and to objections against those who break the law. I offer a direct comparison. It is much easier to get the sympathy of one's neighbours if one drives a motor car at 32 mph in a 30 mph limit in the middle of the night than if one drives over the drink limit. The reason why is that everybody recognisesindeed, there has been a very good bipartisan campaignthat drinking and driving is dangerous and unacceptable socially. Therefore, peer pressure is very strong and properly so, particularly and noticeably among young people. If one breaks the speed limit in the circumstance that I described, people tend to feel, Well, it was the middle of the night and nobody was around. Such an act is certainly illegal, and of course the law has to be obeyed and applied. But my point is that once there is a feeling of unfairness, the social and peer pressures reduce.
	I want a tax system that is so clear, obvious and open that people believe thatwhether or not they like the tax, the Government or the Paymaster Generalthey ought to pay it. That seems to me to be right. If they want that system changed, they should find, through the democratic system, somebody who is prepared to change it. The Paymaster General has presided over such a complication of the tax system that ordinary people with limited resources must now take legal and tax advice in a way that they never had to before.
	I have said what I am about to say before, and I will go on saying it. I hope that the Paymaster General will accept it, as it is not a personal comment, but she has been in the Treasury team for a long time. Under the tax system that we now have, ordinary people who own a house that has risen in value and who earn income from more that one source need technical advice that their predecessors in history never needed. The right hon. Lady must put that and some other problems right. Above all, she must try to make things simpler. That would be very good for the nation, but very bad for accountants.
	One of the lesser purposes of this House is to make life difficult for accountants. If she can do that with this measureand at the same time ensure that lawyers also have less workI should be very pleased.

Dawn Primarolo: In debates such as this, it is important to bear in mind the specifics of the matter in question. That is preferable to taking a trip down the highways and byways of the individual views held by hon. Members. Today, we are discussing the tax system, and I want to respond to the points raised by the hon. Member for Runnymede and Weybridge (Mr. Hammond) in respect of new clause 5.
	Before I do so, however, I want to put something on record. I know that the hon. Member for Runnymede and Weybridge knows this, but I want to make sure that other hon. Members are also aware of the situation. New clause 5 refers to a specific action that the Government took to close double trust avoidance arrangements.
	Those arrangements are very complicated, and people do not fall into them in error. Double trusts are expensive to set up, and they benefit people who want to remove 500,000 or more from inheritance tax liability, under rules that have been in place for a very long time. The arrangements apply to houses, but also to works of art, furniture and an amazing range of items. In this rather simplified presentation, however, I shall use houses as my example.
	Under the double trust arrangement, people would give their house to a trust. The trust then owns the house but the deal is a paper transaction only and so no money changes hands. The trust pays with what is, in effect, an IOU, but that IOU cannot be kept by the house's original owners. Therefore, it is put into another, unconnected, trust. The original owner has neither the property nor the income from it, but is able to continue living in it, even though it has been removed entirely from the inheritance tax regime.
	The Government took various steps to change the arrangements. The classic way to deal with an anti-avoidance arrangementto which some Opposition Members objectis to introduce complex legislation targeted specifically on removing the possibility of avoidance. This time, however, the Government decided to take a different route and say that people could elect out of existing arrangements. The hon. Member for Runnymede and Weybridge spoke about unwinding, and I shall return to that later, but the Government's approach meant that people did not have to unwind arrangements that they had entered into.
	As a result, people could claim, Fair cop. We shouldn't have tax planned. We didn't mean to do it or for it to carry on into the future. We understand the point that the Government is making. If they did that, people only had to tell the Government that the double trust scheme had been cancelled. By electing out in that way, people could get back to where they should be in the inheritance tax system. That is all that we are discussing.
	The hon. Gentleman gave a long explanation of various possibilities. Sometimes such trusts are set up for children, and complications arise about the age of the children and whether they can be beneficiaries. The hon. Gentleman made a point about the sequence of events, but the lesson is that anybody who is foolish enough to go in for complicated tax planning must understand how the rest of the tax system might impinge on that planning.
	The hon. Gentleman raised the issue of the IOU in the second trust, depending on who died first and the age of the children, and the possibility that the spouse may be subject to charges if the IHT charge comes in earlier than expected. That point has been raised with us before, and officials at HMRC are currently discussing that point with advisers. My approach to the points that the hon. Gentleman madeand, therefore, the approach that the officials will takeis that I am not prepared to sanction further exemptions from what are very clear rules. The rules contain a clear exitthe electionbut as the hon. Gentleman suggested, we have been prepared to remove double charges. When specific examplesnot individual caseshave been provided that can be encompassed in the regulations and have the benefit of removing unintended consequences, I am prepared to consider them and I have asked my officials to do so.
	When we consulted on the proposals, they were not greeted favourably by the tax planning industry, but that is no surprise. It was busy selling schemes that we wanted to prevent it from selling. I did not expect industry representatives to beat a track to my door to say, Thank you, Minister. We're really pleased you did that. My officials asked the industry whether we needed to consider transitional arrangements while schemes were unwoundto address the points that the hon. Gentleman made about the possibility of an unfair double charge. At that point, the industry claimed that unwinding was impossible, because the schemes were so complicated.
	Therefore, we came up with the simple proposition that the taxpayer could elect out of the scheme by a simple declaration to the tax officials that the scheme would no longer operate. The schemes did not have to be unwound and taxpayers did not have to pay for them to be unwound or pay to take advice on their unwinding. The taxpayers could sign a piece of paper, send it to HMRC and it was done. I thought that that was a good, simple way to solve the problem. However, this year, people are coming back to us and saying, Hmm, we think we'd like to unwind. Can you give us general powers to unwind schemes? My answer is no, for the following reasons.
	Call me a cynic, but I have a horrible feeling that the sudden desire to unwind is prompted by the discovery of a way to replan. I also think that election is a good and fair answer for all taxpayers.My understanding of the main thrust of the points made by the hon. Member for Runnymede and Weybridge is that he has been briefed that there could be unintended circumstances where double or unfair taxation may arise, and the desire to avoid that is his only motivation for the new clause. It is not because he wants to return to tax planningto go back to go. However, the regulation-making power, which the House found somewhat controversial, allows the Government to do that. There are some valid cases, one of which the hon. Gentleman put today and which my officials are taking forward. The power to make regulations remains available so that HMRC can consider using it further, if advisers who favour the unwinding route can make a detailed case that it is designed specifically to reach one endfairness to the taxpayerand not to open up other possibilities. That can be achieved through decent dialogue between HMRC and advisers who are concerned about the issue. That is where we are.
	The hon. Gentleman does not need his new clause because the regulating powers provided enable the House to respond to detailed cases. As the arbiter on whether the regulations are made, I set a reasonably simple and straightforward test, which is the intent of the House: those who say they need such powers have to make the case for the powers and the regulations, and must demonstrate exactly which unfairness we need to address. If they can do that, and if they are open with HMRC, I shall certainly be prepared to give from the Dispatch Box the undertaking that the hon. Gentleman seeks and bring forward the exact details of precisely what is needed to address the perceived injustice. It will then be considered. But I will not give him an undertaking from the Dispatch Box that a general request for power to unwindwherever that might take taxpayers and tax plannerswould be granted, because it will not.
	I hope that the hon. Gentleman will see that powers exist and that opportunities for change are in the hands of taxpayers and their advisers, and the people who are advising him. If those advisers provide the details, they will be considered and if necessary regulations will be changed to ensure that the perceived unfairness does not occur. On that basis, I hope that he will not push the new clause to a vote, but if he decides to do so, regrettably, I shall ask my hon. Friends to oppose it.

Philip Hammond: I am disappointed that the Paymaster General has chosen to paint as bad people those who use trusts that were perfectly legal tax-planning devices when they were set up. As I said earlier, those people have come out with their hands up; they have accepted that the trusts did not work and they now want to exit from the system.
	The Paymaster General's remarks did not address the fact that the Government have already acted to offer relief to many of those people. We cannot have a situation where some of the people who set up trusts are bad people and do not deserve relief, while others are good people who can elect to escape from at least the economic effects of the arrangements that have been put in place.
	The Paymaster General reiterated my words in using the phrase unintended consequences. I have not clearly understood from her remarks that those in this group of approximately 30,000 people, for whom it is not appropriate to use the route of an election, are the products[Interruption.] The Paymaster General asks why it is not appropriate. I have given the two most important reasons: first, the possible impact on beneficiaries of children's trust if they die within seven years; and, secondly, the advancing to the time of the first death of the charge to inheritance tax when the taxpayers involved are a couple who make an election for a property that they hold jointly. That would have the disastrous consequence of causing inheritance tax to become payable by the widow or widower of the deceased at the time of the first deatha huge cash-flow problem that would almost certainly involve the forced sale of the house. That is why I am advised that the election process is simply not appropriate for certain groups of people.
	As the Paymaster General has spotted, I did not invent the new clause and the arguments that support it. We have been advised by the Chartered Institute of Taxation and the Society of Trust and Estate Practitioners, as the Paymaster General has. The arguments that I have used have already been made in detail both to the Paymaster General

Dawn Primarolo: indicated dissent.

Philip Hammond: Well, those arguments have been made both to the Paymaster General and to senior Revenue officials. If she is not able to say something more specific about the relief that we seek for that group of people, I have to believe that the relief that she is thinking of may be very much narrower that the one that I have been seeking.
	I am pleased to hear that HMRC is discussing these matters with advisersI assume that that means with practitioners and those in the wider world outsidebut the Paymaster General's commitment to addressing the full extent of the problem that I have outlined seems to be a bit less than 100 per cent. Indeed, if I have not misinterpreted her too much, she has tried to blame the whole thing on the tax advisers by suggesting that they did not identify the problems that would arise in unravelling such arrangements, so that the measures that the Government have put in place for elections have not addressed the situation in which all those people find themselves.
	Although I understand very well the Paymaster General's view on tax planningI have had four weeks in which to study her view on people who engage in tax planningI do not think it helpful to adopt the tone that she adopted about the tax advisory industry and people who engage in what is, when they engage in it, perfectly legal tax planning, thereby taking advantage of the taxpayer's age-old right to arrange his affairs within the law to minimise his tax until such time as the Government change the law. That is the game of cat and mouse in which Paymasters General since time immemorial have been engaged.
	I do not believe from the information that I have received that it is at all fair to characterise the approach that is being madeprincipally by lawyers, who are being consulted on ways to unwind such arrangements and get people out of the mess that they are inas stimulated by having spotted an opportunity to undertake some alternative planning. If I may say so, perhaps seven years in post has made the Paymaster General a tad too cynical about those in the world outside.

Geoffrey Clifton-Brown: The Paymaster General may have misunderstood the import of what she is doing in such elections. I understand that some form of court order will be required to break such trusts. That is the only way a trust can be broken. Therefore while she may have mitigated the tax problems, she has not dealt with the future problem of double taxationthe fineif a second death occurs after the trust is in place.

Philip Hammond: I am sure that my hon. Friend is right to suggest that a court order might be required to break a trust, but I cannot comment on that. My understanding is that the new clause would provide an effective route which, in substance, would reverse the transactions and create precisely the situation that would have existed had the arrangement not been entered into in the first place. That is to say, the settlor would be liable for inheritance tax on the value of the house, but there would be no tax liability on the now cancelled debt. I should say that things would not be quite as they would have been before, because the settlor would still be disadvantaged in the ways that I outlined earlier. There would be an element of penalty that perhaps would satisfy the Paymaster General's general view that people should be deterred from engaging in tax planning by finding it expensive to exit from retrospective taxation arrangements once they are imposed.
	The Paymaster General did not give a time scale for the relief that she will possibly be able to introduce, and the time scale is extremely important. We are talking in many cases not about very wealthy people, but about people living on quite limited incomes who will now be required to meet an income tax charge until they have unwound these schemes.
	The Paymaster General did not attack the new clause itself, and it was drafted by a senior legal professional. Although I accept her intention to look at the matter further, I shall ask my hon. Friends to vote to indicate the strength of feeling that exists in the House and outside and to help to stiffen the Government's resolve as they take the matter forward.

Question put, That the clause be read a Second time:
	The House divided: Ayes 153, Noes 340.

Question accordingly negatived.

New Clause 7
	  
	Road Fuel Regulator

'In the Hydrocarbon Oil Duties Act 1979 (c. 5) section 6 (excise duty on hydrocarbon oil) there is inserted after subsection (1A)
	(1B)   The Chancellor of the Exchequer shall publish a forecast based on the expected direction of international oil prices.
	(1C)   When the average price per litre of a fuel listed in subsection (1A) above increases by more than 3 pence over any period of six months, the Chancellor of the Exchequer shall make regulations reducing the duty rate on that fuel and that reduction in fuel duty shall be based on the increase in the cost per litre accounted for by VAT.
	(1D)   Whenever international oil prices rise above the level estimated by the forecast made in accordance with subsection (1B) above, indexed fuel duty increases shall be frozen until the international oil prices return to the forecast level..'.[Stewart Hosie.]
	Brought up, and read the First time.

Stewart Hosie: I beg to move, That the clause be read a Second time.
	We are seeking to amend the Hydrocarbon Oil Duties Act 1979 with the new clause, which, I am pleased to say, has the support of the Road Haulage Association as well as members of the Scottish National party, Plaid Cymru, the Democratic Unionist party, the Ulster Unionist party and the Social Democratic and Labour party. It is designed to deal with oil prices that are exceptionally high for various reasons and with exceptionally high pump prices for road fuel. It has no impact at all on expected revenue, because the mechanism would apply only when oil prices and revenues are above the Chancellor's forecast range or when the fuel price at the pump increases by more than 3p over a six-month period. As it applies only when fuel prices are abnormally high, it has no implications for the environmental benefits sought by the ongoing managed increase in duties.
	There is widespread recognition of the pain suffered by the road haulage industry. Bankruptcies in that sector are twice the average of other industry sectors. Hauliers' average running costs are 52p a milesome right hon. and hon. Members will remember when petrol and diesel cost 52p a gallon. Competition from hauliers in Europe, driven by lower fuel prices elsewhere, have led to a massive reduction in the percentage share of cross-channel freight delivered and carried by UK hauliers. The industry and, indeed, domestic car users pay some of the highest fuel prices in Europe, driven by some of the highest taxes on fuel in Europe of 69 to 74 per cent.
	That is bad enough, but the biggest problem is the inability of businesses in particular to plan properly while fuel prices rocket. Unlike spikes in the past, those prices have stayed high for a long period. Our proposals for a road fuel regulator in proposed subsection (1C) respond to prolonged increases in the price of fuel at the pumps. If there were a rise in petrol and diesel of 3p a litre or more in any six-month periodaccording to my calculations, there have been three occasions since 2000 when that has happened to four-star petrolour proposal would take the edge off the increases and minimise the impact on businesses and consumers. To give a little background, the first prolonged spike above 3p a litre for a six-month period occurred between January and July 2000. The price remained high and, if our proposal were operating, the regulator would have remained in force until December 2000. When the second spike occurred between September 2002 and March 2003 the regulator would have remained in place for one month until April 2003. The final spike in four-star prices occurred between April and October 2004, and the regulator would remain in place until the present time. We propose that the Chancellor be required to reinvest the additional revenue that he receives from VAT on the higher pump price to lower the duty on fuel in such circumstances.
	As an illustration, the Automobile Association has done its own calculation based on unleaded fuel. It estimates that some six months ago the average price of the fuel was 80p.

Charles Walker: Does the hon. Gentleman accept that if we are to reduce greenhouse gas emissions, as we all want to do, fuel prices will have to increase over time, perhaps quite rapidly, and that tax is one way of achieving that increase to reduce usage?

Stewart Hosie: I thought I had covered that earlier. If we use duty or taxa price mechanismas a disincentive for car use, that is a managed increase. I am referring to the prolonged spikingthe unexpected increases for which businesses in particular cannot planover and above the normal increases in duty that may or may not be applied as an incentive to reduce vehicle use. I hope that helps.
	As I said, the AA, using its own estimates on unleaded petrol, indicated that some six months ago the price of a litre was about 80p. This month it is about 86p. If our road fuel regulator were in place now, that would trigger a cut in fuel duty of 1.2p, which would be paid for by the increased take in VAT over the past six months. It would take away some of the painsome of the spikefor consumers and road hauliers at no real cost to the Treasury, as the revenue that it gained was unexpected in the first instance. Such a move would have lowered pump prices from the near-record highs that we see today and moderated them at the level that existed around mid-April.
	As the AA Motoring Trust pointed out, the price reduction would put just under 1 million a day back into the pockets of consumers, into the bottom line of businesses and presumably into the tills of the shops and other small businesses on which many of our communities depend and on which the Chancellor depends for his tax take.
	I shall quote further from the AA. Because of the 6p increase that it estimates over the past six months,
	individual motorists have seen the monthly cost of petrol for a typical privately owned car rise from 87.43 in January to 94.02 in May. In households with two cars this represents a 13.18 hit on family expenditure each month
	that is, over and above anything that one would have expected. That is not good news for the small businesses in all our constituencies or for the Government, who rely on our collective spending power to keep their economy going.
	The second element of the road fuel regulator would ensure that freezes on fuel duty are not left to the whim of the Chancellor, but are instead automatically triggered by world oil prices which are in excess of a forecast that we would have the Chancellor make in each Budget.

Helen Goodman: I am slightly puzzled by subsection (1B), which states:
	The Chancellor of the Exchequer shall publish a forecast based on the expected direction of international oil prices.
	That already happens. I have found six references to the oil price forecast in the financial statement and Budget report. It is one of the forecasts that is independently audited by the National Audit Office, and it reads directly through to the forecasts for North sea revenues and for hydrocarbon fuel duties, so I do not understand why the hon. Gentleman is proposing a new obligation to make a forecast.

Stewart Hosie: We consider it important that a ranged forecast be made in order to allow the trigger mechanism for the fuel price regulator to kick in, so we thought it was importantwe spoke to the Clerks about this when we drafted the new clausethat that was laid down in the new clause because it was referred to specifically by a subsequent clause. I hope that helps the hon. Lady. I must move on.
	The second element of the road tax regulator would ensure that freezes on fuel duty were not left to the Chancellor, but were triggered automatically. In his Budget this year the Chancellor announced an increase in fuel duty of 1.22p in September, equivalent by coincidence to the reduction that would have happened had the fuel tax regulator been in place. Although we are delighted that that has been frozen for the time being, it should not be at the whim of Government, but should be triggered automatically by high prices in the world oil market.
	Hon. Members will remember the saga from last year when the Treasury repeatedly deferred its proposed duty rise from the 2004 Budget. Motorists and hauliers were given no certainty. The decision to freeze or not to freeze seemed to be based on nothing more than the Chancellor's moods, or perhaps his political sensitivity to too-high fuel price rises. The haulage industry would much prefer certainty and an automatic trigger to what has become known as the Chancellor's choice.
	Under subsection (1D) of the new clause, if oil prices rose above the forecast levels by the Chancellor in his Budget report, there would be an automatic freeze in fuel duties. In today's circumstances, that would put some 20 million a month back into the pockets of constituents and local businesses, including haulage businesses, but would not affect the forecast revenue for the Government, as it would kick in only after the forecast was breached upwards.

Helen Goodman: The oil price is particularly volatile, so how, at the time it goes up, would we make a judgment as to whether it is a spike or a structural change? That is a significant flaw in the proposals.

Stewart Hosie: The volatility is precisely the point. To avoid Governments having to scurry about freezing duty levels, the process should be automatic depending on the circumstances. I am happy to concede that there will have to be a facility to take cognisance of whether the price rise is a prolonged spike or a structural change. I accept that our new clause is not perfect, but I hope that the Government will take on board its principle. I also hope that the hon. Lady takes that answer in the spirit in which it is intended.

Helen Goodman: Is the hon. Gentleman suggesting a mechanism rather like the commodity agreements in international markets in the 1980s whereby when prices go up the duty is cut and when they go down there is a symmetrical arrangement the other way round?

Stewart Hosie: We are suggesting that when prices rise, that pays for a reduction in fuel duty, but when world oil prices rise there is a freeze on any duty rises that are planned, to help to ameliorate some of the worst consequences of such rises. It is not our intention to deny the Government any money by changing when the price goes down.
	So far this year, Brent crude has touched $60 a barrel and is averaging well over $50 a barrel. In three months, the Exchequer has made almost 1 billion more than expected, and we judge that there is plenty of room in the coffers for this limited measure to give assistance to hard-pressed hauliers and motorists. It has support from the haulage industry and from several parties in the House. It is a sensible response to a genuine problem for road users, especially those who have no option but to travel to make their living or whose livelihood is in transport and haulage.

Charles Walker: Is not the hon. Gentleman particularly concerned about the impact that fuel increases have on rural communities and people who have to use their cars to travel long distances just to go about their everyday lives?

Stewart Hosie: The hon. Gentleman must have seen my summing-up. It is no surprise that Members who back the new clause represent, by and large, rural and semi-rural constituencies. However, not only rural areas in Scotland, Wales, Northern Ireland and large parts of England are at stake. Every single product we buy in any shop or store is, to some extent, carried by hauliers by road. The implications for the industry and for the prices that we all pay for everything are affected by high fuel prices at the pump and high oil duties.
	The new clause is a sensible response to a genuine problem. The first element would reinvest VAT revenues to lower fuel duties, should the price at the pump stay high for a prolonged period. The second would freeze oil duties on the basis of market conditions, not the Chancellor's whim.
	Some may argue that higher fuel costs will take motorists off the road, but as I suggested earlier, the new clause would not minimise or negate any planned or managed duty rises for the purpose of environmental benefits, because it simply provides for removing or ameliorating the worst effects of spiking, prolonged spiking and high world oil prices.
	I ask all hon. Members who are considering voting against the new clausethe empty Labour Benches suggest that Labour Members are in their officesto remember the businesses and consumers in much of Scotland, Wales, Northern Ireland and large parts of England that need a haulier to get their goods to market. I ask everyone to think of hauliers whose margins are already tight, to consider transport businesses that are offshoring and going out of business, and to think of the families and consumers who do not have the option of a regular bus, train or tube service to get to work or perform the most basic task, even getting to school.
	The new clause is a sensible amendment to moderate high oil prices and to mitigate prolonged rises in the price at the pump. We need a road fuel regulator to benefit the people who put us all here a few short weeks ago. I ask the Government to consider seriously at least the principle of the new clause. I hope that it can gain as much support throughout the House as it deserves.

Mark Francois: I wish to respond to new clause 7 on behalf of the official Opposition. The hon. Member for Dundee, East (Stewart Hosie) introduced it succinctly. In essence, the new clause tries to establish a device for reacting to increases in the price of oil and for reducing duty automatically when certain conditions, which the amendment specifies, occur. It is an important subject for the Treasury and for taxpayers, including hauliers and motorists generally.
	Duty on hydrocarbon oils raised slightly less than 23 billion in the financial year 200304, representing roughly 5 per cent. of total Government tax revenues in that year. According to the Library, the UK has the second highest pump price for unleaded petrol in the European Union after the Netherlands, and the highest pump price for diesel, which is clearly especially important for hauliers. The UK also has the highest taxation on petrol in the EU, with approximately 70 per cent. of the pump price of unleaded petrol being accounted for by a combination of taxes and duties.In addition, there have been further increases in world oil prices in recent months. Oil was trading last week at more than $59 a barrel. When I checked this morning, Brent light contracts for August had opened at just over $58 a barrel. Given that VAT is part of the final price for petrol and diesel, that has brought in additional revenue to the Treasury.
	In the light of that position, the Government issued a written ministerial statement only yesterday afternoon, in which they confirmed that, following sustained pressure from G8 Finance Ministers, the Organisation of Petroleum Exporting Countries is committed to increasing production quotas by up to 1 million barrels a day by September 2005. Nevertheless, the Government are abandoning their planned inflation increase in the price of main fuel duties, including petrol, which was scheduled to come into effect on 1 September this year. That was probably a fair decision. Given the current oil price, it would not have been right to proceed with a further increase at this time.
	The House has to decide whether, given yesterday's decisions, it would be appropriate to accept new clause 7 as well. To decide, we must examine the elements of the new clause. We have no major objection in principle to the suggestion in proposed subsection (1B) that the Chancellor should include an annual projection of estimated trends in oil prices as part of his Budget statement. Oil is a major fuel for the world's economy and fluctuations in its price have implications beyond simply the price of road fuels, extending to air travel and important sectors of manufacturing industry.
	As was rightly pointed out by Labour Members earlier, the Red Book already contains a number of assumptions about future oil prices, so the Treasury has told us something of its expectations. I presume that those who tabled the new clause wanted to formalise that projection: perhaps they thought that the Chancellor could make it one of the headline projections in his statement, along with those on growth and borrowing. As I said, however, the Treasury already puts some of the information in the public domain.
	Subsection (1C) proposes a mechanism whereby if the price of nominated fuels rises by more than 3p a litre over six months, the Government will scale down the increase in duty by an amount equivalent to the extra VAT that is payable on the increase. The new clause does not really make it clear how the calculation would be made or how the arrangement would operate. Would the six-month average be a rolling average, for example? The wording seems to imply that, but we would like clarification.
	Subsection (1C) also does not make it clear how long the discount would last. Would the period between the 3p trigger and the coming into effect of the attendant regulations be very brief, or could the regulations be retrospective over the entire six months if necessary?The new clause says that the Chancellor must produce regulations, but it is not specific about the timing. Moreover, a brief spike in the oil price lasting for, say, a fortnight could theoretically affect the average sufficiently to trigger the mechanism. A fair amount of work and administration could be required for what constitutes a relatively small price reduction.
	There is also the practical question of how people would be reimbursed, if they were reimbursed at all, for duty that they had already paid at the pump earlier in the six-month period, before the trigger kicked in. Or would the refund go to the oil companies, but not to the motorists or hauliers?

Nadine Dorries: In my rural constituency, I represent many market gardeners, farmers and road hauliers who must battle adverse weather conditions as well as adverse pump prices. The new clause seems to involve a great deal of uncertainty, whereas what those people need is more certainty.

Mark Francois: One or two road hauliers are active in my county of Essex and there are a number of farmers in my constituency. I think that we understand the spirit of what has been attempted in the new clause, but we are here to make law, and the law that we make must be operable. Part of the problem with subsection (1C) is that it is almost too complicated for its own good.

Nigel Dodds: The hon. Gentleman has drawn attention to difficulties in the specific terms of the new clause, but what is his party's view on the general principlewhat the hon. Member for Dundee, East (Stewart Hosie) suggested was the spirit of the proposal?

Mark Francois: I shall make our position fairly clear towards the end of my speech. I understand the hon. Gentleman's question, but I hope that he can be patient. Incidentally, we find it interesting that the new clause was tabled both by parties that are fierce defenders of the Union and by parties that are not so keen on it.
	Subsection (1D) contains a potentially more powerful measure. It proposes that whenever international oil prices rise above the level estimated in the Budgetthe formalised estimate proposed in subsection (1B)indexed duty increases should be frozen until prices return to the forecast level. There are practical problems with that as well. First, there is the technical but nevertheless important question of how international oil prices will be defined for the operation of the clause. Will the definition depend on Brent light, West Texas intermediate, Dubai or some other representative basket of oil prices? If one is putting into law a trigger that affects the payment of duty, it is important to be clear on exactly the circumstances under which that duty would operate. I do not mean to steal the Financial Secretary's thunder, but I would not be surprised, as he is a Treasury Minister, if he had a similar view of those matters.

Alex Salmond: Will the hon. Gentleman give way?

Mark Francois: In a moment.
	Moreover, the adoption of new clause 7 as draftedagain, assuming that there is a formalised statement by the Chancellorwould provide an obvious incentive for a Chancellor to err on the side of caution in his supposed annual forecast of the likely oil price, no doubt mindful of seeking to protect revenue against the potential kicking-in of subsection (1D) over the course of the year in question. In theory, if the Chancellor must project for 12 months, he could reasonably be expected to make a conservative estimate of what that figure could be, because if subsection (1D) kicked in, the effect on the overall figures in the Red Book could be substantial.

Alex Salmond: The hon. Gentleman made what he described as an important point about which crude would be the benchmark. He has already pointed out, however, that the Treasury makes a forecast of oil prices. Did his researches carry him as far as knowing on which crude that forecast is currently based?

Mark Francois: The hon. Gentleman's party was among those that put forward the amendment and it is not my duty to explain his amendment to him, but his party's duty to explain it to the House. If I might say so, it could have done a better job of it.

Alex Salmond: Will the hon. Gentleman give way?

Mark Francois: No.
	We can see what the minor parties have been trying to achieve, but the mechanism, especially in subsection (1C), appears to be complicated in its potential implementation. We accept that high fuel prices pose a genuine problemI am trying to answer the question of the hon. Member for Belfast, North (Mr. Dodds)and that that is in large part because of the substantial proportion of duty that the United Kingdom pays, which is the highest in the EU.

Brooks Newmark: While I very much agree with the hon. Member for Dundee, East (Stewart Hosie) that we all have tremendous sympathy with road hauliers, of whom I have several in my constituency, all of us have motorists in our constituency. A bigger concern to motorists might be the Sustainable Development Commission with its plan to raise vehicle excise duties from 165 to 900 to 1,500 for the average family car. Strangely, that was not published until after the general election. Does my hon. Friend agree that that is a much bigger concern?

Madam Deputy Speaker: Order. A bigger concern that might be, but I am afraid that it is wide of the new clause that we are discussing.

Mark Francois: I do not mean to challenge you for one moment, Madam Deputy Speaker, but it is always nice to see a fellow Essex Member of Parliament chipping in to these debates.
	We can see what the minor parties were seeking to achieve, and we acknowledge that high fuel prices pose a particular problem, which is caused mainly by the high level of duty.

Helen Goodman: Did the hon. Gentleman hear the thoughtful speech by his right hon. Friend the Member for West Dorset (Mr. Letwin) last week on climate change, in which he suggested that in order for political parties to stop using fuel prices and other issues as a political football, such decisions should be neutralised by the setting up of an independent authority? What the hon. Gentleman is saying this afternoon does not seem wholly consistent with what his right hon. Friend was saying last week.

Mark Francois: You have already chided the House, Madam Deputy Speaker, for straying slightly wide of the mark. Mindful of that, I think that I can say that the hon. Lady will be aware that there is a lively debate in the environmental community about climate change, nuclear power and other issues. As I hope she will appreciate, I am attempting to focus on the specific point about the value of duty and on exactly what is proposed in the new clause.
	To summarise, we can see what the minor parties were trying to do, and we appreciate that there is a real issue with the level of duty, but the mechanism in the new clause, especially in subsection (1C), appears to be very complicated to implement. We therefore believe on balance that, unless there were a sudden massive external shock, rather than building the specific mechanism in the new clause it would be more appropriate to continue to monitor the oil price closely and take decisions on duty as part of the budgetary process in the normal way, as the Government did with their announcement yesterday. On that basis, we are unlikely to be able to support the amendment if it is pressed.

Christopher Huhne: We approach the new clause with much sympathy with its objectives, but like the hon. Member for Rayleigh (Mr. Francois), we are somewhat sceptical about the practicalities. The proposals seem principally motivated by a certain playing to the public gallery, not least because the new clause calls for the publication of something that, to my certain knowledge, has been a regular part of every Red Book for many years. I must point out to the hon. Member for Dundee, East (Stewart Hosie) that he will find a fairly extensive discussion of the Chancellor's forecast in paragraph C49 on page 252 of the Red Bookand, indeed, a prediction by the Chancellor:
	Oil prices are expected to average $40.6 a barrel in 2005, in line with the average of independent forecasts.
	That is, of course, an assumption audited by the National Audit Office.

Alex Salmond: Yes, but it is not a statutory obligation, and if we are proposing a statutory new clause to do something we cannot leave it to the discretion of the Chancellor whether he does or does not publish a forecast. Does the hon. Gentleman now understand why the requirement has to be in the new clause?

Christopher Huhne: I am grateful for that clarification, but it would be very odd if the new clause required the Chancellor to do something if it were not implicit that he is already doing it, and the forecast is already there. I am not sure that we need the belt-and-braces approach that the hon. Gentleman suggests.

Alex Salmond: I am sure that the hon. Gentleman is not presuming to know more about the drafting of new clauses than is available to all Members through the excellent expertise of the Clerks of the House. Or does he think that he knows more than them?

Christopher Huhne: I am sure that I would defer to the Clerks in that matterbut I come back to the point that nowhere in the presentation by the hon. Member for Dundee, East or in what was said by the hon. Member for Banff and Buchan (Mr. Salmond) has there been any awareness that the information is regularly published; certainly, neither of them drew attention to the fact in much detail.

Mark Francois: I would like to put on the record the fact that, as the hon. Member for Banff and Buchan (Mr. Salmond), with all his experience, will be well aware, we are lucky enough to have excellent Clerks in this place and they will always provide advice, including technical advice, on amendments. However, the responsibility for the amendment finally tabled is that of the Members who table it, not that of the Clerks. I hope that the hon. Gentleman will remember that.

Christopher Huhne: I am grateful to the hon. Gentleman for making that point, as I am a new Member and certainly would not want to get the wrong side of the Clerks; in my experience, they have been extremely helpful with our drafting.
	The more fundamental point that I wanted to make concerned not the forecast but the fact, which I think gives a hint of the populist nature of the new clause, that no mechanism is proposed for unwinding

Charles Walker: I hold no brief for the Scottish National party, but it was a bit unfair to call its new clause opportunistic. The road haulage industry is in crisis. Not only do our hauliers have to contend with very high fuel prices, but they are being priced off European roads. There is also a massive driver shortage because the thresholds and costs of becoming a heavy goods vehicle or large goods vehicle driver has increased dramatically over the past three years. I believe that the industry's concerns are genuine.

Christopher Huhne: I thank the hon. Gentleman for that intervention, but I did not say opportunisticI said populist, and I was about to explain why. The hon. Member for Bishop Auckland (Helen Goodman) earlier questioned whether the new clause was designed as a proposal to smooth particular changes in world oil markets. If so, it seems to me that it would be intellectually reputable and, perhaps with rather more detailed work on the drafting, it might command a substantial measure of support in the House. However, the reality is that the proposal operates only in one direction.
	The question of whether we are dealing with a substantial secular change in the trend rather than a cyclical spike was asked earlier, but it was not answered and it really must be addressed. As I said, Liberal Democrat Members are sympathetic to the objectives, particularly in view of the problems of rural areas and of road hauliers. I am sure that the hon. Member for Banff and Buchan, with his expertise as an economist in the financial sector, will warm to another important objectivemacro-economic stability. I remember, as will he, the period between 1979 and 1981 when there was an oil price spike. The Conservative Government of the day substantially aggravated matters on the inflationary front and through the reduction of effective demand by doubling value added tax, thereby creating a far worse shock to the economy than was visited by the increase in oil prices itself. That shows the need for a wider debate.
	As I say, I am sympathetic to the objectives and would not be at all surprised if Labour Members were, too, particularly on account of macro-economic stability. We must remember that, broadly speaking, the UK is in net balance on its oil account, so there is not the same need for a terms of trade change as there would be if we were a substantial net importer of oil. For all those reasons, I am sympathetic to the new clause, but I think that the practical issues remain substantial. It would be sensible to see how the proposal unwinds as well as the plus point of taking an increase off a particular spike.
	My party is deeply concernedas, I hope, is the Scottish National party, particularly in a week when the G8 leaders are meeting at Gleneaglesabout the prospect of global warming and the need to maintain pressure over time for a gradual shift, which must not be too extreme, towards fuels and means of propulsion that do not have substantially damaging effects on the environment.

Michael Weir: What the hon. Gentleman says about global warming is fine, but can he tell us the time scale? I represent a large rural constituency that, apart from one rail link on the coast, does not have any transport other than road. My constituents rely on rural transport, and rural businesseswhether coming in or out of the areaare suffering because of high fuel prices. If something is not done to help them now, they will not be here in 10 years time.

Christopher Huhne: As I have said, I am completely sympathetic to the problems of road hauliers and other motorists in present circumstances. My party has set out various proposals for alleviating that difficulty, but I am dealing now with the specifics of the new clause and I have to say that, for the reasons that I have set out as a matter of principle and that the hon. Member for Rayleigh has provided as a matter of practicality, it will not deliver the objectives that we may well hold in common. I fear, therefore, that we cannot support new clause 7 because it has not been thought through in such a way as to deliver the objectives that we agree are necessary.
	I am conscious of the need to move on, so I shall sum up by saying that if, in further conversations with the hon. Member for Banff and Buchan and his party, we can develop a proposal that would smooth matters and preserve the pressure to deal with the overwhelming problem of global warming, we should do so. However, I am afraid that this new clause does not do that.

Alex Salmond: I am amazed by some of the contributions that we have just heard. I should say to the other Opposition parties that it is normal to allow the Financial Secretary to point out the defects in amendments and new clauses. That is what Ministers do, and they do it, incidentally, in response to Conservative and Liberal Democrat amendments. What is less clear is why the Conservative and Liberal Democrat spokespeople should spend their time on this matter, rather than confronting the essence of the issue. Perhaps the time spent in opposition has made them long to be on the Treasury Bench and, as a result, they have to take on some of the arguments that the Treasury put forward, rather than looking at the issue that concerns our constituents.
	The Opposition's job is to make proposals in an effort to represent their constituents. The job of Opposition and constituency Members is to look for problems in our constituencies, and to try to do something about them. I should point out to the Conservative Front-Bench spokesman in particular that although my colleagues in the Democratic Unionist party and I do not agree on the future constitutional make-up of the United Kingdom, we do agree on the issue of serving our constituents. We are well aware that many of our constituents in Scotland and Northern Ireland have similar problemsas, indeed, they do in Wales and in many rural parts of England. I should point out to all Members of this House that in tabling and discussing amendments, it would be rather better to concentrate on their constituents' interests, instead of trying to make foolish debating points.
	None of us is entirely clear whether the Conservatives are, in principle, in favour of our proposal, but it did not seem that way to judge by some of their Back Benchers' interventions. I am worried about the practical question of whether the principle behind the proposal also bothers them; more clarification on that point might be useful. Incidentally, the answer to the question that I asked the hon. Member for Rayleigh (Mr. Francois) is Brent light. I do not think it a hugely significant problem to set a marker crude. Many of us have known about these matters for years, and it is as well before making pernickety points to be fully familiar with the subject that one is trying to debate.

Charles Walker: I simply wanted to point out that I have some sympathy with the hon. Gentleman's concern for the haulage industry, of which I have had some experience in the past 10 years.

Alex Salmond: I am prepared to exempt the hon. Gentleman entirely from my strictures. In fact, I was about to move on to a joint target of ours on the Liberal Democrat Front Bench.
	To be accused of playing to the gallery by a political party that has specialised in putting the moan into sanctimony is absolutely extraordinary; as if the Liberal Democrats do not play to a political gallery! The only difference between the Scottish National Party and other parties supporting this new clause and the Liberal Democrats is that they play to different political galleries simultaneously in various parts of the country. So I advise them to try to found their opposition on something a bit more substantial than accusing their political opponents of playing to a political gallery.

Christopher Huhne: Will the hon. Gentleman therefore describe how the proposed arrangements in the new clause would be unwound? What would happen if the price went in the other direction?

Alex Salmond: The new clause is about windfall gains and VAT. If the price is dropping, there are no windfall gains, so the new clause is not triggered. It is a one-way, modulating, smoothing clause.
	I forsake the Liberal Democrats in order to take on a trite point from Labour Members about whether a forecast already exists in the Red Book. Yes, we know that there is a forecastI have been debating it for many years with successive Chancellors of the Exchequer. But if a statutory mechanism is proposed, that forecast has to be in statute. If the Chancellor decided for some reason not to make the forecast, the rest of the provision would fall as a result. That is a reasonably obvious point. I know that the hon. Member for Eastleigh (Chris Huhne) is new to the House. If he ever makes a proposal similar to this one, he will find that he will also have to put the dependent mechanism into statute.
	As has been said, the UK has the highest fuel taxes in Europe, especially for derv. For a variety of technical reasons to do with refineries, the price of derv is rising faster than the price of petrol in the oil market. The situation is very serious.
	My hon. Friend the Member for Angus (Mr. Weir) said that his constituency has one rail line. Mine has none: there is not one metre of railway in Banff and Buchan, so there is no alternative to road haulage for the transport of goods to market. The high price of derv is very serious because it means that the percentage of goods being moved by UK hauliers is falling like a stone, as they cannot compete with their counterparts in other European countries. As my hon. Friend the Member for Dundee, East (Stewart Hosie) said, the number of bankruptcies in the haulage and transport industries is rising exponentially.
	I have here a graph that explains the reality, and why the Scottish Nationalist, Plaid Cymru, Democratic Unionist and Ulster Unionist parties support this new clause. The highest fuel prices in this so-called united kingdom obtain in Northern Ireland, the highlands and islands of Scotland, rural Wales and parts of rural England. That is why we are pleading with the Government that something must be done.
	The new clause is about windfall gains. The Red Book forecast an oil price of $40 a barrel. It estimated oil revenues from corporation tax and petroleum revenue tax at about $6 billion. The average price of Brent light so far this year has been $55 a barrel. The House of Commons Library puts the windfall gain for the Chancellor at 5 billion, if the price rise is maintained throughout the financial year.
	The Chancellor has decided to forgo an increase in the fuel duty, at a cost of about 200 million. The additional mechanism suggested in the new clause would cost another 200 million, and be offset by the increase in VAT revenues. This new clause would have a modulating or smoothing effect. It asks the Treasury to give back a tiny proportion of its windfall gains from high oil prices to help hard-pressed people in our constituencies.
	I have known the Financial Secretary for some years; he is one of the Government's more successful and able Ministers, and he has a lively and inventive mind.

John Bercow: That may ruin him.

Alex Salmond: I hope that my high praise does not cast a pall over the Financial Secretary's political prospects. He carries out his role well, but it must be depressing for him always to be asked to display his formidable intellectual powers defending various tax-raising mechanisms. That is what he has done over most of his illustrious political career, but the new clause gives him an opportunity to put his subtlety, inventiveness and powers of persuasion to another use.
	Our proposal offers a mechanism for which I know the Financial Secretary has been searching. The proposed modulator or smoothing-out mechanism would enable him to use a tiny proportion of the Treasury's windfall gains to help hard-pressed business and constituents in this country's rural areas.

Adam Price: It is always a pleasure, and sometimes a challenge, to follow my hon. Friend the Member for Banff and Buchan (Mr. Salmond). The hon. Member for Rayleigh (Mr. Francois) referred to political co-operation across the islands and across differences of opinion on the constitutional future. Certainly, my constituentsfarmers, hauliers and otherswould be interested in the unholy alliance that is developing between the Front Benchers of the three main UK parties. The minority parties are proud to stand up for the interests of their constituents on this matter because of the crisis facing the haulage sector, which is of vital strategic importance in my area of Wales and in the constituencies of my hon. Friends.
	The haulage industry had another disappointment yesterday with the announcement that we would not have the distance-based road tax scheme that it has been promised and that would have helped to overcome some of the competitive disadvantages that the sector faces in competition with foreign hauliers. We need action on behalf of the haulage industry, because it is going to the wall in west Wales and parts of Scotland, Northern Ireland and, indeed, England.
	As we have heard, west Wales and the highlands and islands of Scotland have some of the highest petrol and diesel prices in Europe. In many areas, 1 a litre will soon be the norm, and we do not have the derogations from duty that are practised in some EU states. That is why we need some protection, and all that we are asking for in the new clause is a cap to provide some protection from the volatility of the international markets. Or will we allow the international oil markets to decide the fate of hauliers and other key sectors in our constituencies? That is not acceptable.
	I read the Financial Secretary's comments yesterday that the delay in the increase in fuel duty was caused by short-term volatility, but that is exactly what he said two years ago. When does short-term volatility become a constant feature of oil prices? That volatility has many causesthe increase in demand from China and problems of supply. There is an interesting debate about peak oil, and some are pessimistic and others optimistic about the oil reserves. The new oil reserves peaked in 1960, so discovery of oil reserves has declined. Volatility will be a long-term feature of the oil market and prices.
	Oil now costs some $60 a barrel, which is three times the $20 a barrel average of the past two decades. Some people talk of the possibility of a cold winter in the northern hemisphere pushing it up to $70 or $80 a barrel. Will we provide no protection for consumers and businesses in our markets? We need a smoothing mechanism, as the hon. Member for Eastleigh (Chris Huhne) suggested, so that instead of disruption and chaos we have a managed target price, set by the Chancellor. We should not allow a windfall tax to put onerous pressure on businesses and customers.
	The issue will not go away. Non-OPEC oil production will peak at some time in the next 10 years and then most of the world's oil reserves will be controlled by a small number of countries whose Governments are unstable and corruptI obviously do not mean Scotland. As we shift from a hydrocarbon economy to a new energy economy, we need to create a mechanism to manage that transition. We need a managed approach to our current reliance on oil, and the new clause presents a possible way forward.
	The Government need to act now. Instead of having a series of announcements about delays, let us have a regulated approach that will provide fairness, transparency and justice for consumers and businesses across the UK.

Alan Reid: High oil prices are clearly causing a serious problem in rural areas, especially in the islands where the price of petrol at the pumps is horrendous. Unfortunately, however, I do not think that the new clause will tackle the problem. When the hon. Member for Dundee, East (Stewart Hosie) proposed it, he admitted that it was less than perfect. I think that was SNP speak for It won't actually work[Interruption.] The hon. Member for Banff and Buchan (Mr. Salmond) asks what is our alternative? It would be to move away from taxes on fuel to a system of road pricing, with higher charges for urban motorways and very small charges for rural roads, especially in the islands, but I suspect, Madam Deputy Speaker, that if I started to explain our future transport policy, you would quickly rule me out of order and ask me to concentrate on the new clause.

Alex Salmond: I must have missed that amendment during our proceedings on the Finance Bill. If that is the Liberal Democrat proposal, it should have appeared as an amendment to a suitable clause in the Bill. We could then have had great fun asking a variety of questions about its technical aspects. If the hon. Gentleman believes that there are fewer technical aspects in what he has just described than in our new clause, I look forward to that debate with great interest.

Alan Reid: rose

Christopher Huhne: May I intervene on a point which, unfortunately, I had to learn the hard way? The hon. Member for Banff and Buchan (Mr. Salmond) may not yet have spent enough time in the Standing Committee on the Finance Bill, or in any other part of the debate on the Bill, to learn that, for reasons that have been lost in the mists of time, it is the procedure of the House that if one produces an amendment that raises revenue as opposed to reducing it, it is not selectable for debate, as I found out. So, I advertise the fact that we proposed a nice pert little amendment designed to close a loophole that Treasury Ministers opened up in the Finance Act 2004

Madam Deputy Speaker: Order. That is really rather a lengthy intervention and I suggest that we return to the new clause under discussion.

Alan Reid: I thank my hon. Friend the Member for Eastleigh (Chris Huhne) for his useful intervention.
	The new clause has three subsections. As has already been pointed out, the Chancellor of the Exchequer already carries out the provisions under (1B). In relation to (1D), this year, the Chancellor sensibly decided not to implement further plans to increase fuel duty. That simply leaves (1C), which is

Stewart Hosie: The argument was that there should be an automatic trigger and that any freeze should not be on the whim of the Chancellor. Is the hon. Gentleman happy that decisions to freeze duty levels are at the whim of a politician, rather than triggered automatically to meet specific circumstances?

Alan Reid: The problem is that the hon. Gentleman has tried to word the new clause so that it covers all circumstances, but he has failed. The new clause is unworkable. It would be much more sensible to have flexibility, so that the Chancellor can act, I hope sensibly[Interruption.] If it were a Liberal Democrat Chancellor, he would act sensibly. Scottish National party Members are trying to use wording that will cover every possible eventuality, which is difficult, and they have failed.

Alex Salmond: If the Chancellor, in his infinite wisdom, had decided to raise duty, where would the hon. Gentleman's argument lie? Would he tell people to vote Liberal Democrat at the next election?

Alan Reid: I support the Chancellor's decision not to increase fuel duty.
	Under proposed new subsection (1C), if oil prices were to rise, we would have to wait for six months, during which people would pay the higher rate of duty. Under the new clause, a small cut would be made in fuel duty; but, of course, that cut could not be refunded retrospectively to the motorists who had paid the higher rate of fuel duty. We know that oil prices fluctuate. Oil prices could rise rapidly, thus triggering the six-month wait to cut fuel duty, but oil prices could then fall and motorists would pay the lower rate of fuel duty until the next Budget, thereby causing a loss of revenue to the Exchequer.
	The new clause is simply impractical, as the hon. Member for Dundee, East admitted in moving the motion. We clearly have a serious problem. In the short term, the answer is for the Chancellor to act sensibly and not to increase fuel duty. In the long term, the answer is to move to a system of road pricing, with higher prices for urban roads and motorways and lower prices for rural roads.

Michael Weir: I am astonished at the contributions from Tory and Liberal Members. I am sure that the electors of Argyll will be very interested to read the speech made by the hon. Member for Argyll and Bute (Mr. Reid). The hon. Member for Eastleigh (Chris Huhne) says that he would have tabled an amendment if it had not been for the rules of the House. That just goes to show that the SNP and our colleagues are much more ingenious in finding a way forward than Liberal Members. Our proposal may be less than perfect, but theirs is less than visible.

Christopher Huhne: The hon. Gentleman has missed the point that his proposal involves a substantial cut in Government revenues with no symmetrical obligation in other circumstances where it would be unwound. He has not specified the circumstances in which that would occur. If he tried to do so, the amendment would probably be ruled out of order and not selected for debate.

Michael Weir: As usual, the hon. Gentleman disguises Liberal inactivity with some weird justification for not doing anything. The new clause is a real attempt to do something for our rural communities. I represent a largely rural constituency and the hon. Member for Broxbourne (Mr. Walker) made the twin point about green issues and saving rural communities. The crux of the matter is that those issues must be balanced. The problem with using fuel price for green reasons is that it is a blunt instrumenta one-size-fits-all policy that does not cover rural areas in the way that it can perhaps cover urban areas. Our rural communities and businesses are suffering nowthey cannot wait for 10 or 15 years until we work out the environmental consequences. We must do something now.

Charles Walker: Does the hon. Gentleman agree that the Liberal Democrats' desire to introduce road pricing as a means to resolve this issue is at least 15 to 20 years away, according to the Government, so it will not address the current problems that he alludes to?

Michael Weir: The hon. Gentleman is being optimistic, since the Liberals opposed such a policy in Edinburgh, and I understand that the Conservatives oppose the extension to the congestion charge in London as well. I would be surprised if congestion charging

Madam Deputy Speaker: Order. Congestion charges are far wide of the new clause, to which the hon. Gentleman should address his comments.

Michael Weir: I take your strictures, Madam Deputy Speaker. The Liberals are playing to the gallery in Edinburgh, as usual, but we are trying to do something for rural businesses.

Alan Reid: Will the hon. Gentleman give way?

Michael Weir: No, I have given way enough.
	I made the point in an earlier intervention that we are dealing with rural businesses and economies. In my constituency, there are many hauliers which transport goods in and out of the area. As I said earlier, there is one rail line that goes up the coast. Theoretically, we could get goods to Arbroath or Montrose by rail, but we must still use the roads to get them from there to all the other communities in the constituency. There is no rail line up Glen Esk, Glen Isla or any of the other glens of Angus. They were all Beeching-ed many years ago by previous Governments. Road transport is necessary to get goods in, and the price of everything that comes into my constituency is affected by the price of fuel.
	Crucially, the price of everything that goes out of my constituency is also affected by the price of fuel. Manufacturing and other industries in Angus need to transport their goods to market and transport is one of their biggest costs. That is also true of industries in Northern Ireland, Wales and many parts of England. Something needs to be done to deal with the cost to industry in rural areas or we will see a leakage of those industries from rural areas to the conurbations.
	One problem is that hauliers have entered into long-term contracts with major producersmany of them are food producers in my constituencyso that the goods can be hauled to market or, as is more appropriate in many cases, to the central distribution warehouses for the major supermarkets. The hauliers have to set a price for a considerable period ahead. When they do not know what the price of fuel will be next week, never mind next year, it is difficult to set a contract price for the long term. Some of them have managed to set a sliding scale in the contracts because of the good will of their customers, but the effect is slight because no one can give away too big a change in margins.
	The whole point behind the fuel duty regulator as proposed by my hon. Friend the Member for Dundee, East (Stewart Hosie) is that it would provide certainty over a period. Businesses could plan ahead and know what the fuel price would be for a set period. We would not face the sudden spikes that are so dangerous to the haulage industry and others in my constituency.

Alan Reid: The hon. Gentleman says that hauliers want certainty but, under proposed new subsection (1C), anything could happen for the first six months.

Michael Weir: The whole point is to smooth the price increases. The hon. Gentleman obviously does not understand the proposal, but there is no proposal from the Liberals. This is the only proposal before us that does something now. I should have thought that he would have been interested in doing something for the rural areas of Scotland and Argyll. My hon. Friend the Member for Na h-Eileanan an Iar (Mr. MacNeil) tells me that fuel now costs 1 a litre in the Western Isles. What does that do to industry? The situation must be the same in Argyll, and I am surprised that the hon. Gentleman is not supporting us. Perhaps I should not be, knowing the Liberals.
	The new clause is a genuine attempt to try to have some certainty for the foreseeable future and to let businesses flourish by letting them know what their costs will be. If we do not accept this or something similar, more and more businesses will go under and they will not only be haulage businesses. Many other businesses in rural areas will be affected. There have already been closures in these areas, as firms concentrate their factories near the centres of population. All of us could give examples of small firms in our constituencies that have fallen victim as employers concentrate their activities near the major markets or the bigger cities.

Angus MacNeil: Perhaps not in Argyll.

Michael Weir: I am sure that there are some in Argyll, but the hon. Member for Argyll and Bute will keep quiet about them.
	I ask Members to support the new clause. It is a real attempt to do something about a serious problem that particularly afflicts rural areas throughout the United Kingdom. It has already been said that the Democratic Unionists, the Scottish National party, Plaid Cymru and all the other Northern Ireland parties have come together on this issue, because it seriously affects us. Possibly the only thing that we agree on is the fact that our rural communities are suffering.

John Healey: We have had an interesting debate. [Interruption.] The hon. Member for Rayleigh (Mr. Francois) tells me to summarise it.
	I congratulate the hon. Member for Dundee, East (Stewart Hosie) on initiating the debate and welcome his involvement in Finance Bill proceedings in moving the new clause. We can certainly find a place for him on the Standing Committee considering next year's Bill if he feels that he is developing an appetite for our debates.
	As the hon. Gentleman listed the small Opposition parties that support the new clause, he included the Road Haulage Association. I know that the association has been interested in such a mechanism for some time and I have regular discussions with Roger King, so I know about the pressures that the industry faces. Indeed, I discussed our decision on the lorry road user charge with him last night.
	The hon. Member for Carmarthen, East and Dinefwr (Adam Price) was wrong to say that hauliers will not get a distance-based road charge. We announced yesterday that our plans for lorry road charging will be taken forward as part of the Government's overall work on national road pricing so that we can work towards a single, comprehensive and cost-effective system. The haulage industry has contributed to the process and has worked closely with us, especially on technology and some of the tests that we have run. We have examined the experience of introducing similar systems in other European countries, which has led to us being stronger in our conviction that a distance-based charge represents the right approach and that such a system would be workable.

Susan Kramer: Does the Minister accept that the road haulage industry was banking on the scheme being in place by about 2008 so that charges could be evened up? The fact that the scheme has disappeared, and that the industry has been told that it will have to wait until 2020 before it can have any hope of alleviation, drives many of the passions expressed today.

John Healey: The hon. Lady has only just joined our debate on new clause 7. Leaders such as Roger King and Richard Tuner of the Freight Transport Association have taken a constructive approach. Although they have been critical at times, they have supported the principle behind the approach that we are taking and will continue to take. However, it is a tribute to the two of them that all the members of their associations have not always taken the same view.

Adam Price: The Financial Secretary says that those people have taken a constructive approach, but Richard Turner, the chief executive of the FTA, was quoted this morning as saying that the Government's decision was reprehensible and broke faith with what the industry had been told over the past five years.

John Healey: We announced yesterday that we remain convinced that a distance-based charge is the right way ahead, but it makes no sense to develop a system only for lorries when it is clear that the debate on national road pricing has moved on significantly since the last election. We thus announced that we would incorporate work on a lorry road user charge in our work on a national road pricing system.
	The hon. Member for Rayleigh reminded the House that I announced yesterday that the Government will not go ahead with the planned inflation-only increase of 1.22 p per litre on road fuel duty on 1 September, which will also apply to duties on rebated oils, biofuels and road fuel gases. We will review the position again at the time of the pre-Budget report. I welcome the fact that he described the decision as fair, although that did not seem to be the view of all his colleagues. The hon. Member for Broxbourne (Mr. Walker) advocated higher fuel duty and prices to discourage demand and reduce emissions from road traffic, which was his concern.
	While we are on hon. Members' views on taxation, I tell the hon. Member for Braintree (Mr. Newmark) that the Sustainable Development Commission has a valuable role of advising the Government. However, just so he is clear, I should point out that it is the Chancellor, not the commission, who makes policy and decisions on tax.

Charles Walker: I would hate the Minister and my constituents to think that I advocate higher taxes. I suggested that there were two sides to every argument. I know that the Scottish National party is keen to reduce greenhouse gas emissions, and I said that that was not consistent with its desire to cap the taxation on fuel.

John Healey: No doubt the hon. Gentleman's hon. Friends and his constituents will read the Official Report tomorrow and see what he said earlier.
	The decision that I announced yesterday was not based on the Chancellor's whim, as the hon. Member for Dundee, East suggested. Following sustained pressure from G8 Finance Ministers, OPEC is committed to increasing quotas by up to 1 million barrels a day by September. In the short term, however, uncertainty and the risk of price volatility remain high, especially so with oil trading last week at above $59 a barrel. By the time of the pre-Budget report, it is likely that there will be more clarity about OPEC and non-OPEC supply, levels of global demand for oil and the level of crude and product stocks ahead of the peak winter demand. I hope that hon. Members on both sides of the House accept that it is in no one's interests to have fuel prices higher than expected or higher than they need to be.
	The best way to deal with high international prices is not by imposing complex mechanisms that respond to what may prove to be temporary fluctuations in prices, but through the efforts that we are making to support producing and consuming nations to promote greater market transparency and to improve the investment climate in the international oil sector, which will help to bring about more stable oil prices at levels that are more conducive to sustainable economic growth.

Alex Salmond: Has the Treasury examined the idea of having a regulator or governor as part of the process of smoothing out the fluctuations?

John Healey: We have, not least because the Scottish National party tried to table similar amendments to other Finance Bills. When such amendments are proposed, we consider the policy proposals and make our analysis of those.
	The hon. Member for Eastleigh (Chris Huhne) mentioned sustainable economic growth. He said that, from an intellectual perspective, he was sympathetic to the approach in the new clause and was interested in the proposal, in the interests of greater economic stability, if it helped to smooth oil prices. We both got the clear answer to that when the hon. Member for Banff and Buchan (Mr. Salmond) said that it is a one-way clause. My assessment of it is the same as that of the hon. Member for Eastleigh, in that it would not have that smoothing and stabilising effect.
	If the new clause were accepted, it would introduce mechanisms that could lead to duty reductions when pump prices rose significantly in a six-month period and it would freeze duty increases when international oil markets were high. The effect of the pump price-related proposed new subsection (1C) on the price that the average motorist pays for a litre of fuel would be small. If the price of petrol rose at the pumps from 85p a litre to 88p a litrea rise of 3pthe new clause would reduce the duty rate for petrol by just 0.525p a litre, not, as the hon. Member for Dundee, East argued, by a value roughly equivalent to the freeze that I announced of 1.22p a litre. Yesterday's announcement to postpone further the planned inflation increase in the fuel duty rate would do more now, which the hon. Member for Angus (Mr. Weir) advocated, than the new clause.
	The mechanism is unnecessarily complex. It would do nothing to bring stability to the market in the UK. Indeed, it is unlikely that consumers would see all the benefitmodest though it isof its operation. Despite being the Minister, and not an Opposition spokesman, I shall not dwell on the technical deficiencies of the drafting of the provision.
	A second mechanism, whereby higher international oil market prices would trigger a freeze in duty increases, would result in expensive changes to road fuel duty and VAT systems both for people who have to account for the tax that they are due to pay and for the Government trying to collect it. The burden is likely to be heaviest for people who are minor oil users and dealers. Finally, the new clause is based on the misconception that high fuel prices lead to higher overall VAT receipts. That is not necessarily the case. If people have to spend more on one commodity they tend to spend less on others, and the overall level of VAT receipts usually remains relatively unchanged. The hon. Member for Dundee, East may be interested in the latest assessment by our analysts, who estimate that a 5p a litre increase in pump prices will result in higher VAT receipts of about 290 million in the current year. The resulting reduction in demand, however, will lead to lower duty revenue of about 500 million. High oil pricesI have debated this point with the hon. Member for Banff and Buchan a number of timeshave a complex impact on public finances, economic activity and Government expenditure commitments. Windfall gains do not, as he claims, necessarily come to the Treasury as a result of rising oil prices.

Alex Salmond: As I have told the Financial Secretary before, if the Treasury truly believed that argument, it would reduce duty to increase the VAT take. Are those the same Treasury analysts who forecast oil revenues this year of 6 billion, and is he confident that that is an accurate forecast?

John Healey: There has been slight confusion in the debate. Earlier, Members were discussing forecasts of the oil price. The Government publish an assumption about the oil price in the Budget and in the pre-Budget report. In the Budget, it was $40.6 a barrel. That assumption is based on the average of the independent forecastsit is not our forecast. We publish it, because we need an assumption for the purposes of public finance planning. The hon. Gentleman must wait until the pre-Budget report. He has been in the House long enough to know that we make our revenue forecasts twice a year in the Budget and in the pre-Budget report.
	In claiming that the new clause will bring benefits for business, the hon. Member for Dundee, East may have overlooked the fact that many businesses, particularly the 1.8 million VAT-registered businesses, can reclaim the VAT incurred when they buy fuel for business journeys. The level of VAT that they pay at the pumps has little or no effect on their overall balance sheet. For those reasons, we believe that the best way of dealing with high oil prices is to work with oil-producing countries and through the G8 Finance Ministers to stabilise the volatility in the oil market and to improve its functioning rather than simply focus on short-term changes to levels of duty by introducing a road fuel regulator, as proposed in the new clause.
	I hope that the hon. Gentleman accepts that we have had a useful debate and, on that basis, does not believe that he has to press his new clause to a vote. If he does so, however, I will urge my hon. Friends to resist it.

Stewart Hosie: I thank the Financial Secretary for his reasoned and reasonable response. His point about reclaiming VAT is quite correct, but a large part of the tax taken on any increase in fuel at the pump is duty, so his argument holds water only to a certain extent. I was intrigued by his suggestion that the published forecast was an average of all the independent forecasts, not a Government one. He may be aware that in economic forecasting all 41 of the independent forecasters are suggesting a growth rate less than that suggested by the Government, but the Government have not downgraded their forecast as they have done for oil.

John Healey: The hon. Gentleman will be aware that the Treasury's recent record of forecasting on economic conditions and growth is a good deal better than that of the independent forecasters.

Stewart Hosie: It would be churlish not to recognise that.
	The Financial Secretary recognised the difficulties faced by the Road Haulage Association, and I welcome that.
	The hon. Member for Rayleigh (Mr. Francois) said, rightly, that the UK had the second highest pump price for petrol, the highest price for diesel and the highest level of combined tax. On the questions that he askedyes, it would be a rolling six-month average before the trigger kicked in. The discount would take effect until the average petrol price again reduced to within the trigger level, which is 3p aboveI will explain this in more detail later. Trust me. The discount stays in place until the petrol price falls below the trigger level again.
	The duty triggerthe world oil pricewas mentioned by a number of hon. Members. We had left that at the discretion of the Chancellor. Brent Light sounds like a rather good oil type on which to base the trigger, but that would be at the Chancellor's discretion, as would the forecast range. There was a suggestion that the forecast range might be quite conservative. I would have thought it might be quite liberal, to avoid the trigger and the discount kicking in.
	That brings me to the Liberals. They were sympathetic to the proposal and the objective. It was marvellous. The hand-wringing and inaction were utterly predictable. I can hardly wait to see the local newsletters in Argyll and Bute when they explain this one away in the Oban Times.
	My hon. Friend the Member for Banff and Buchan (Mr. Salmond) outlined the working of the proposal and explained how the windfall gains would be used to smooth out, as I said a number of times in my speech, the spikes and the prolonged spikes that occur in the fuel price. I want to make it clear that this is a one-way smoothing out to mitigate against the worst circumstances that result from prolonged spiking. It is not to penalise people at the bottom end when prices go down. It is to smooth out at the top end and to allow businesses, in particular, proper financial planning. It is intended to take away at least some of the pain produced by prolonged rises in oil prices and pump prices.
	A number of serious points were made in the debate. I considered for a moment the Financial Secretary's invitation to me not to press the motion further. We consider the matter to be serious. The new clause had the support of five parties in the House, covering if not large numbers of the electorate, then large geographical parts of the UK. It is a serious matter in Northern Ireland, in Wales, in Scotland and in large parts of England, so I decline the Financial Secretary's invitation not to press the motion to a vote.

Question put, That the clause be read a Second time:
	The House divided: Ayes 12, Noes 351.

Question accordingly negatived.

New Clause 9
	  
	Real Estate Investment Trusts

'(1)   The ICTA 1988 is amended, by inserting after section 842A
	Real Estate Investment Trusts
	(1)   The Treasury shall, by regulations, to be laid prior to 31st October 2005
	(a)   make provision about the treatment of Real Estate Investment Trusts for the purposes of any enactment relating to the taxation or Stamp Duty Land Tax, and may make provisions for separate sub-funds of such trusts;
	(b)   impose requirements on a company as to the conditions that need to be met for a company to be a Real Estate Investment Trust for an accounting period;
	(c)   provide for the modification of any enactment relating to taxation in its application in relation to
	(i)   Real Estate Investment Trusts,
	(ii)   shareholders in Real Estate Investment Trusts; or
	(iii)   transactions involving Real Estate Investment Trusts;
	(d)   make provision for transitional arrangements for companies incorporated before 1st January 2006 that become Real Estate Investment Trusts on or after the 1st January 2006..
	(2)   Regulations under this section shall not increase the tax to which a Real Estate Investment Trust or an investor in such a Trust would be liable except for those regulations.
	(3)   This section shall come into effect the month after the passing of this Act.'.[Mr. Spring.]
	Brought up, and read the First time.

Richard Spring: I beg to move, That the clause be read a Second time.
	New clause 9 would compel the Government to introduce tax legislation to facilitate the introduction of real estate investment trusts as a collective investment vehicle for property in the United Kingdom. The Government have been good at announcing the introduction of REITs, but have so far failed to deliver the goods. As a result, investment has gone offshore.
	It should be noted that despite several announcements by the Government of tax legislation to give effect to REITs, such legislation does not appear in the Bill. That is due to problems involving the current method of taxation of overseas landlords, whereby rents payable to them are subject to a 22 per cent. withholding tax except when the landlord has the prior agreement of the Inland Revenue. The worry is that a REIT will effectively escape such a tax when paying a distribution to the overseas landlord. However, many other countries have REITs and have appropriate tax regimes for them.
	There is genuine concern that the current position is causing the property fund industry to locate elsewhere. There are now 3 billion-worth of listed property trusts in Guernsey that might otherwise be in the United Kingdom: that has been confirmed by Merrill Lynch investment managers. The quoted property investment trust market has increased from approximately 0.3 billion in 1998 to nearly 3 billion now, going from effectively 0 per cent. to 10 per cent. of UK listed real estate by market value. However, the market value of onshore trusts has remained nearly constant. Virtually all quoted property has gone offshore.
	In the United States, REITs are a commonly held investment vehicle. Japan launched them in 2001, France in 2003, and Germany is considering introducing them. It would be preferable if we could introduce a regime before Germany. Companies are effectively developing equivalent structures elsewhere. A major insurer established such a vehicle in Guernsey, complaining that it would have liked at least to have the option of making it a UK vehicle.
	In the US, REITs now own no less than $220 billion worth of real estate, of which $35 billion is residential. They have to distribute 90 per cent. of their income, and tend to have far greater and more consistent dividend yields than conventional shares. Given the ageing profile of the British population, that will be important, as pension funds have more retirees than future pensioners making contributions, and seek to move from having assets with potential growth to having income-producing assets.
	REITs tend to have different cycles from the bond and equity markets. They therefore make for prudent investment by individuals, pension funds and life assurance companies wishing to reduce risk by maintaining a diversified portfolio. REITs also tend to trade at near asset value, whereas current UK property groups tend to trade at a discount to net asset value, often of between 10 and 15 per cent.
	The longer it takes the UK to establish such a vehicle, the lower the tax take will be as more and more vehicles go offshore, and the bigger will be the loss to the UK economy. Perhaps one of the Government's concerns about REITs is that they produce high levels of income, and might be unwelcome competition for the other forms of income-producing investment that investors could consider: for example, the increasing amount of Government debt that the Treasury issues to finance the Exchequer.
	If we turn to the history of REITs, the Budget of 2003 included announcements to improve the flexibility and efficiency of the commercial property market. The pre-Budget report of 2003 announced the consultation paper to be produced in the Budget of 2004, following on from the Budget of 2003. In the Budget of 2004, a consultation document was launched promoting more flexible investment in property, and seeking views on how a new property investment funda UK version of the successful US REITsmight be structured to meet the Government's objectives of further enhancing the liquidity of property investment, providing greater access to retail investors and encouraging expansion in the private rented sector. Of course, we have now come to the Budget of 2005.
	Accountants and actuaries often identify as one of the characteristics of the Government that Treasury announcements are made without adequate supporting information on which they can make judgments, and often express anxiety publicly about the impact of Treasury announcements that are made without the supporting detail, given all the pressures that result on business and business decisions. It is curious that we have the reverse situation herethe Government have made four announcements about REITs, but no specific date for introducing such vehicles has been brought forward.
	The British Property Federation is of the view that there will be no net tax leakage for implementing a REIT regime. The US experience is that REITs pay significant taxes other than corporate tax, such as business rates, stamp duty land tax and VAT, before any shareholder-level taxes. US REITs are widely held, and it should be noted that the US has rules to prevent overseas owners from controlling REITs to avoid US tax. As I shall indicate, Canadian research shows that such vehicles should produce a slight increase in tax yields in the longer term. We are therefore concerned by the Chancellor's reluctance to bear the possible short-term fall in tax revenuesthe determining reason why the Government refuse to introduce REIT legislationwhich is further discouraging capital investment from the United Kingdom.
	The US plans to get around concerns about US owners abusing the rules by having concentration limits. Withholding taxes, which were 30 per cent., generally had the habit of blocking and deterring foreign investment that would otherwise be welcome. In the late 1990s, the US Treasury reduced the high withholding taxes on REIT dividends. That applied to all newly negotiated treaties in which withholding taxes were lowered for investments below a certain threshold, typically to 15 per cent. As a consequence, the level of overseas investment in US REITs substantially increased.
	It should also be noted that external investors in UK property normally shelter their 22 per cent. tax charge under the current overseas landlord regime, typically by gearing up their investments. A 15 per cent. withholding tax rate would probably levy more tax than the 22 per cent. as the withholding could not be reduced by an overseas investor gearing up to buy shares in the REIT, especially given that REITs have tended to produce considerable income.
	The Canadian Institute of Retail Funds and Canadian Institute of Public and Private Real Estate Companies also undertook a very detailed and scientific study of similar issues around withholding taxes for REITs. It concluded that there would be an immediate reduction in tax yields, being the corporation tax forgone on dividends and capital gains, net of the tax collected through withholding. When taking into account that most of the value would generally be deferred to tax residents who would pay tax on their REIT shares and dividends, however, the result was a net increase in tax yields. Overall, therefore, the REIT vehicle would result, at best estimate, in a small increase in tax yields in the long term.
	On a wholly dispassionate point, it is difficult for people to retain a satisfactory return on their investments in dividend terms because interest rates throughout the world today are very low, and in many instances lower than in this country. Individuals go into REITs as a form of investment to capture yield. For example, the US experience shows that the average REIT yield in dividend terms is 5.13 per cent., whereas the Standard and Poor 500 stock index yield is 1.8 per cent. It is difficult for people to get a satisfactory return, and this is certainly one way of doing it.
	6 pm
	The National Association of Real Estate Investment Trusts in the United States recommends the following, based on the US experience, all of which we could reasonably include in UK tax law. The first recommendation is not to have a quoted requirement for REITs; the second is to permit gearing to reduce the level of withholding tax and distributions payable by REITs, with the sensible suggestion that we should have safe harbour levels for effectively tax-deductible debta principle worth considering throughout UK tax law.

Geoffrey Clifton-Brown: Will my hon. Friend not also press the Government on the following fact? If there were a greater market in commercial propertyundoubtedly there would be a more flexible market if REITs were introducedthe Government would also gain more in tax through increased business activity generated thereby, because leases would be granted more flexibly.

Richard Spring: I entirely agree. Indeed, in submissions made to the Treasury by the British Property Federation, those exact points have been spelled out.
	We are fortunate in this country to have a hugely successful and internationally recognised financial services industry, with a skills and knowledge base that is incomparably successful by international standards. We can be grateful that it exists, because as we all recognise, our manufacturing capabilities do not match our success in the financial services industryand REITs represent an area of investment that the investment community wants to see on the statute book.
	The Government have accepted in principle that this is the right thing to do, but for reasons that are difficult to understand, they have been unable to come to a firm conclusion. I simply say to the Paymaster General that there is no substantive disagreement on the principle, but we must accept that at this stage we need to fix a date for the introduction of REITs. That is exactly what the new clause is all about, and I hope that the Minister's response will clarify how we can move the process forward as rapidly as possible.

Rob Marris: I have three questions to ask the hon. Gentleman. As background, he cited the figures and the research from Canada, but as the House will know, Canada is 32 times the size of the United Kingdom and has twice as much house building per capita per annum as this country does. What evidence does he have of the effect that REITs would have on house prices in this country, the availability of houses for home owners to buy, and the levels of rents, both commercial and domestic?

Susan Kramer: Despite the comments of the hon. Member for Wolverhampton, South-West (Rob Marris), REITs are a largely non-controversial issue; indeed, there is consensus across the House that they are a desirable instrument. For the ordinary consumerthe retail investorREITs are important because they are easy low-cost mechanisms for entering and exiting the property market. They would allow people to diversify their investment portfolios, which is what we want, to enable people to manage risk better within their investments.
	For the Government, there is a desire to achieve a closer alignment between the taxation of direct and indirect property investments. I fully recognise that there are issues that the Government must tacklesuch as definition, legal issues, issues of withholding and foreign investors, and the ring-fencing of ownership and management versus the actual activities that take place on property. Surely, as we look around the globe, not least at Australia and the USA, there are plenty of examples of how all those issues have been tackled. The new clause is, from the perspective of the Liberal Democrats, essentially a wake-up call. It is about saying to the Government that they should please get a spur into Treasury officials, of whom we see so many in and out of the Box day after day, and get something sorted so that REITs can be made properly available to people in the UK.

Ivan Lewis: May I first welcome the new attachment of the Opposition parties to the concept of REITs? It was, in fact, this Government who introduced the potential benefits of a REIT system and we never heard any proposal to that effect from Opposition parties.
	New clause 9 follows a simple pattern. Opposition Members have said that they want to focus the Government's mind on making more rapid progress in solving the problems associated with REITs. The problem with the new clause is that it invites the Government to introduce regulations before 31 October, irrespective of whether, before that date, we have resolved all the difficulties and concerns that hon. Members have accepted as authentic and legitimate. How can a particular date be specified for a set of proposals when there is no way of being certain that it is possible to resolve the outstanding problems relating to them? Doing so would be entirely irresponsible.
	What we have said throughout is that it is our objective and desire, if we can resolve the problems, to introduce proposals for the next Finance Billand that remains our position, but we cannot guarantee it. If, in the course of our discussion and consideration of the issues, it continues to become apparent that the principles necessary to underpin a REIT scheme cannot be secured, we will have to take that into account before taking any final decisions. The message about the need to make rapid progress on REITs is, frankly, one that the Opposition have no need to keep telling the Government.

Edward Balls: I fully accept the Minister's point that REITs were originally a Treasury proposal rather than one suggested by Opposition Front Benchers. Given the earlier comments of Conservative Front-Bench Members about the importance of having simplicity and stability in the tax system, does my hon. Friend find it rather strange to hear them arguing that we should rush ahead with legislation before we have had enough time to sort out the technical details? Surely it is in the interests of stability and transparency that we get the legislation right before we put proposals before the House.

Ivan Lewis: I entirely agree with my hon. Friend that consistency is not a trademark of the Opposition, as we have seen throughout our debate on the Finance Bill. Conservative Members are telling interested parties outside that they are aware of the importance of REITs, but the Government have already made that clear on several occasions. We have also placed on the record, in the context of the Budget and the Finance Bill, our belief in the importance of REITs and the fact that we support them in principle. We have also acknowledged that, if at all possible, we need to make speedy progress with them.
	As I have said, the problem with the new clause is that it confines the necessary debate, discussions and consideration of the genuine difficulties that we face in reaching a decision to a period before the end of October this year. It is easy for the Opposition to propose such amendments, but it would be entirely irresponsible for the Government to accept a time scale that we have no way of being absolutely certain of meeting.
	There is no need for Opposition Members to continue to reiterate that we all support the concept of REITs in principle. Nor is there any need for those Members to tell us that it needs to be done as quickly as possible. We differ in that we are not prepared to compromise on the fundamental principles that we have outlined time and again. We have talked about the desirability of REITs, but also about some of the genuine obstacles and barriers to achieving them.
	I say to those who have a genuine interest in putting a sensible and credible REITs framework in place that the credible thing to do is to work with the Treasury and the Government to ensure that the obstacles and difficulties are resolved. If that happens, we can put REITs on the statute book very quickly. On that basis, I ask the hon. Member for West Suffolk (Mr. Spring) to withdraw the motion.

Richard Spring: It is a real joy to have the presence of the hon. Member for Wolverhampton, South-West (Rob Marris). Something was lacking in our proceedings until, as I came to the Dispatch Box, there he was; the whole atmosphere in the Chamber suddenly lifted. I am delighted to see him, but I should point out that his questions could more appropriately have been put to his own Front Benchers, who have had a number of years in which to resolve these issues. I cited the experience of the United States in respect of residential, rather than commercial, investment, and gave the hon. Gentleman the relevant figures. So the experience of the United States has been specified and spelled out, and I dare say that it might be comparable in this country.
	I should point out to the Economic Secretary that he doth protest too much. The idea seems to be that our suggestion is appalling, irresponsible and gratuitously offensive. The argument is that we are suggesting that this process, about which we have heard in three successive Budgets, should suddenly become terribly quick, and that it is quite wrong to deal with it rapidly. The Government have had a number of years in which to consider this issue. There have been representations from the investment community[Interruption.] I thank the Economic Secretary for that sedentary intervention. I am not sure whether I heard him correctly, but he seemed to suggest that he wants us to participate in this process. We would be more than delighted to do so, and so would the investment community. Perhaps we could then persuade him to reach some form of conclusion.
	The idea is that 31 October is in some way a blood-curdling date, but all that the inclusion of such a date is designed to do, as the Economic Secretary well knows, is to bring this issue to a rapid conclusion. As he will know from the industry, because this issue has not been resolved, money is going offshore instead of coming into this country. However, it has been resolved perfectly satisfactorily in a number of foreign jurisdictions. I should point out that it is not a case of officials doing an outstanding job and the Treasury being at fault; it is Ministers themselves who are procrastinating and who cannot get their act together. [Interruption.] The same point applies to the hon. Member for Normanton (Ed Balls).
	We have tabled this new clause in order to raise this issue yet again. I am afraid that those out there who are watching this particular Government performance will be extremely disappointed by the Economic Secretary's response. We do not wish to press the matter any further, other than to make the perfectly valid point that it should be brought to a proper conclusion. I hope that it will be dealt with very rapidly, and that we can stop the endless procrastination that is so damaging for our businesses. That said, I beg to ask leave to withdraw the motion.
	Motion and clause, by leave, withdrawn.

Clause 18
	  
	Section 17(3): Specific Powers

Christopher Huhne: I beg to move amendment No. 2, in page 17, line 39, at end insert
	'for the purpose of avoiding any tax.'.
	I too will attempt to be very brief. This is a modest amendment, which I should like to advocate. We discussed this issue in a Committee of the whole House and I put various points to the Economic Secretary, to which I hoped that he would respond with, perhaps, a Government amendment. Such an amendment has not been forthcoming so far, and it would be very pleasant to have from him an assurance about the problem created for qualified investor schemes by the current wording of subsection (3). Unfortunately, it is possible that an entirely blameless, taxpaying investor, through no fault of his own, could find that an institutional investor, or some other large investor, has left him with 10 per cent. of the qualified investor scheme. That blameless person would then be subject to the taxation regime set out in clause 18(3).
	That cannot have been the Treasury's intention, as the clause contains various careful exemptions designed to make sure that smaller investors are not caught by the problem. I hope that the Economic Secretary will address that matter, and try to get qualified investor schemes up and running. They have cross-party support, and would be an adornment to our financial services industry.

Ivan Lewis: I cannot accept the amendment, but I want to reassure the hon. Member for Eastleigh (Chris Huhne) about some of his reasonable concerns. First, he will accept that a purpose test needs careful consideration to ensure that it hits the right target and can be effectively enforced. The amendment would pre-empt the further discussion and work required before such a test could be introduced. The wording of the amendment restricts the application of the rule to situations in which the investor's only purpose in owning 10 per cent. or more of a fund is tax avoidance.
	That would make it simple for investors to get around the rule. It is almost always possible to find some other reason, however trivial or irrelevant, for owning 10 per cent. or more of a fund. To prevent sidestepping other-purpose rules, the Bill stipulates that tax avoidance must be the main purpose, or one of the main purposes, behind entering into transactions. Without such protection, it is unlikely that the different tax treatment rule would ever be applied.
	To police a combined 10 per cent. and purpose test would inevitably lead to greater compliance costs for the industry, investors and HMRC than would be incurred by a straightforward rule that applies a different tax treatment based simply on percentage ownership of a fund. The experience from other-purpose tests is that proving that tax avoidance was the only purpose is difficult and time consuming. It also leads to uncertainty for the investor while the position is resolved.
	I hope that the hon. Gentleman finds the next bit helpful. We recognise that some investors may end up owning 10 per cent. or more of a fund inadvertently. For example, that might happen if a substantial investor redeemed his units. To ensure that investors who find themselves over the limit unwittingly are not affected adversely, the regulations will provide a period of grace for matters to be reversed. I have said that before, but I am happy to repeat it today.
	As with all the regulations planned for authorised investment funds, officials will continue to consult stakeholders on the detail of how the relaxation in respect of the sort of inadvertent breach that I have outlined will operate. We believe that the 10 per cent. rule is a simple percentage rule that applies a different tax treatment to investors who meet or exceed it. Qualified investor schemes are restricted to sophisticated investors who will know when that different treatment will apply to them. Such investors will also know exactly what the consequences will be if they meet or exceed the limit. To add a second leg that requires a subjective test of motive would remove those certainties.
	I hope that my response goes some way towards answering the concerns voiced by the hon. Member for Eastleigh in respect of those people who might find themselves to be inadvertent victims of the proposals. We are making it very clear, on the record, that the regulations will be sensitive to investors' circumstances. Given what I have said, I hope that the hon. Gentleman will feel able to withdraw the amendment.

Christopher Huhne: On the basis of the reassurances given by the Economic Secretary, I am pleased to beg to ask leave to withdraw the amendment.
	Amendment by leave, withdrawn.

Schedule 9
	  
	Insurance Companies Etc

Mark Field: I beg to move amendment No. 5, in page 131, line 14, at end insert
	' ; but no order under this section shall be made unless a draft has been laid before and approved by resolution of the House of Commons.'.

Mr. Deputy Speaker: With this it will be convenient to discuss amendment No. 6, in page 131, line 43, at end insert
	'(8)   No order under this section shall be made unless a draft of it has been laid before and approved by a resolution of the House of Commons.'.

Mark Field: As the Economic Secretary will appreciate, the amendment covers some of the ground that was cantered over in Committee, but that is unavoidable. We are attempting to ensure that statutory instruments are required for the inserted section 431A of the Income and Corporation Taxes Act 1988 that appears in schedule 9. One of those SIs would be to ensure that as life assurance company taxation is driven off regulatory returns, the tax rules can be altered where necessary where there is a change in the regulatory rules that has a consequential effect. The second is set out in paragraph 3 of schedule 9, which we debated at some length in Committee and is fundamental to how such companies are taxed. It effectively allows the Inland Revenue to alter the tax sections that determine either the rate of tax on which a life assurance company pays its profit or the allocation of investment return between non-taxable pension business and taxable life assurance. Life assurance companies are subject to a tax charge that combines two factors, one being a charge on the shareholder profit that the company makes and the other a charge on the investment return on the assets that are backing life assurance companies. That is effectively then charged to the policyholder.
	As the Economic Secretary will be aware, there are no limits on what the Treasury can include in the secondary legislation, and we believethe amendment tabled by the Liberal Democrats suggests that they agreethat that gives far too much power to the Inland Revenue and too little potential protection to the taxpayer. We argued in Committee that there should be, as a matter of course, parliamentary scrutiny as to whether the proposed changes should be introduced by statutory instrument and the limitations placed on what should be contained in that instrument.
	There is also a concern that a double charge might inadvertently arise following the implementation of the statutory instrument, in one of two ways. Either the investment return on the attributed estate could be included in the pension business computation and taxed as proposed in an earlier draft SI as taxable life businessthe latest SI, released as recently as 17 Juneindicated that the regulations would be written so that that would be the case. We would like the Minister to confirm that. Alternatively, any investment return on attributed estate that is now taxed would be taxed again when taken to shareholders' funds. That is an obvious double charge that remains, which is why we tabled an amendment in Committee, which was discussed at length.
	In Committee, the Economic Secretary said:
	The context is that the industry and the Government have had an ongoing dialogue in an attempt to reach a satisfactory agreement and conclusion. In the context of those negotiations, that consultation and that debate, significant agreement has been reached between the industry and the Government on a practical and realistic way forward. Given the discussions between the industry and the Government, it is slightly surprising that in Committee we should find that the industry is in a sense encouraging the Opposition to challenge an agreement that it made with the Government. There has genuinely been a listening process and a two-way dialogue.[Official Report, Standing Committee B, 30 June 2005; c. 25253.]
	Without querying the Government's good faith, I have to say that the insurance industry does not regard that as a fully accurate statement. I am sure that it was not intended to mislead, but the industry feels that although there have been discussions and some of the more outlandish proposals, such as taxing mutuals as having shareholder profit, have been droppedit appreciates that there has been some movementit does not regard the final outcome as entirely satisfactory. The industry rightly considers that such amendments should be made by way of primary legislation and should not be introduced in what is effectivelypartly because this is the second Finance Bill this yearin a rush. The industry also believes that the Government should be even-handed and ensure that life assurance companies will not be taxed on more than 100 per cent. of their investment return, which is the potential downside of the double charging to which I have referred. In the view of the industry, the regulations remain in a draft state. The Inland Revenue has known about the tax planning in question for almost a decade, so it cannot reasonably claim that the rules have to be introduced in a rush.
	The Economic Secretary also claimed that there could be no double charge under the proposed regulations as the investment returns on a non-profit fund cannot be deferred through the use of an investment reserve. Two specific points arose from the insurance industry briefing. First, the industry feels that non-profit funds can have investment returns and, in years of high investment return, should maintain them as a matter of reasonable actuarial prudence. Secondly, the income on such attributed estates may need to be maintained in the longer-term fund due to agreements that may be made with the regulator, which leaves open the possibility of a double charge, to which we referred. I hope that issue can be addressed in the final form of the regulations.
	I do not want to go over old ground and repeat the arguments, as I am sure that the Minister is fully aware of all of them. Given the continued uncertainty, however, many experts in the insurance industry remain unconvinced of the necessity to enact the change in the current year, rather than awaiting the outcome of a proper review of the apportionment system. We hope, therefore, that he will give serious consideration to taking on board the amendments that we have tabled. In any event, we shall be interested to hear what he has to say, although I appreciate that he may want to reply relatively briefly as many of the issues of principle were debated at great length in the Standing Committee.

Christopher Huhne: I, too, shall attempt to be brief, as time is marching on and we discussed the issue in the Standing Committee at considerable length. I have three points. The first is that the measure is not being proposed by the Treasury to deal with tax avoidance. There is no pressing reason why the Government should include it in this Finance Bill, rather than allowing the consultation process to continue and introducing a more substantive measure in the Finance Bill next year. The matter has been under discussion for a long time, and the fact that the Treasury proposes an explicitly time-limited measure lets the cat out of the bag and reveals the rather half-baked nature of the basis on which the Government intend to proceed.
	My second point is that the regulations are tax-raising measures that should properly be the preserve of Parliament and positively agreed by the House. For that reason, I commend the amendment. Thirdly, the proposals are arbitrary and discriminatory and have changed dramatically from those that were first aired in the draft regulations published at the end of 2004. They would have had an impact throughout the life insurance industry, whereas under the current proposals the focus would be on only a small number of companies for a similar amount of revenue. Those companies are thus entitled to expect some independent restraint on the freedom of civil servantsalbeit under the direction of Ministers, who are no doubt already on the caseto push through measures that could have a significant impact on their commercial position.
	For reasons relating to the technical taxation aspects of the substantive measure and the principle that the matter should be discussed in the House, I hope that the amendment will be supported. I look forward to the Minister's response.

Ivan Lewis: First, I shall respond to some of the specific points made by hon. Members. The hon. Member for Cities of London and Westminster (Mr. Field) again expressed concern about double charging and again I reassure him, on the record, that we believe that no double charge is possible and that regulations will deal with the issue. If people can demonstrate that there is a risk of double charging we will ensure that the regulations reflect whatever is necessary to prevent it. I hope that that reassures the hon. Gentleman.
	The hon. Member for Eastleigh (Chris Huhne) implied that, somehow, the position that we have arrived at in the Bill was a bolt out of the bluean unexpected, entirely different proposal from the one that emanated in the past. I refer him to a High Court judgment about a transfer of business that involved AXA Sun Life. It is interesting to note what the judge said:
	AXA accepts that the calculation
	of the assumptions about the tax that it would pay in future
	was on the basis alleged but contends that it is highly likely that in the future the Inland Revenue will seek to close what they regard as a loophole in the taxation of insurance funds and that accordingly tax rates will rise . . . The FSA says that they do not regard AXA's tax assumptions as unreasonable.
	That judge made those comments in the year 2000, so our proposal can hardly be described as a bolt out of the blue or something that has come as a tremendous shock to the industry.
	I respond to what the hon. Member for Cities of London and Westminster said about the sector's claim that our description of the consultation and negotiations with them was inaccurate by saying that we specifically attached a sunset clause to the substantive measure because of the representations and concerns that have been articulated by the industry and the sector. Either they accept the inevitability that such changes will be made, or they continue almost to play for time, to engage in consultation that is not real. We have responded sensitively and directly to their requests that we attach a sunset clause to the measure because of the concerns that the industry has expressed on a number of occasions.
	As hon. Members know, we had a lengthy debate in Committee on Opposition amendments to remove the regulation-making power altogether. Having withdrawn those amendments, they now seem to be coming from a different angle to try to achieve the same objective: making the regulations follow the affirmative procedure. Obviously, we are not unsympathetic to the points made by some Opposition spokespeople. Where the Bill, or the first Finance Bill introduced in March, enacts a major reform under secondary legislation, that may be done by regulation under the affirmative procedure in some circumstances.
	For example, the affirmative procedure is used for the rewriting of the rules for authorised investment funds in the Billthe subject of amendment No. 2, which we have just debatedand the securitisation companies in the Finance Act 2005. However, the legislative framework established by the powers in both those cases is permanent. In both casesthe legislation for authorised investment funds and securitisation companiesthe affirmative power has been limited to the first use of the power when the new structure is established.
	Schedule 9 is different as it involves a temporary use of powers, limited by the sunset clause that the industry sought. On Second Reading, the hon. Member for Eastleigh said:
	At present, there is a simple approval of new regulations by the House when they are first introduced; thereafter, revisions are subject only to the negative resolution procedure. There is no trigger point at which a general assessment of the operation of delegated powers can be undertaken, but it seems to us that there should be.[Official Report, 7 June 2005; Vol. 434, c. 1153.]
	I assume that what he meant by a trigger point is a sunset clause. I take him to be saying that a sunset clause is an alternative to an affirmative procedure. That is exactly the position that the Government have adopted in the legislation.
	I appreciate that the power in schedule 9 to make regulations is capable of being used to make radical changes, even if only for 2005. If that were done, there ought to be an opportunity to debate those changes, but hon. Members who served on the Committee will know that I circulated a letter that contained details of the proposed regulations and that the regulations will affect only a limited number of cases in precisely the way I that described. They ensure that income from assets that are wholly excess to policyholder requirements is taxed at the appropriate rate and that, as I have said, there are mechanisms to ensure that no double counting takes place.
	It has been claimed that there has been no scrutiny of the regulations. I resent the suggestion from the industry that there has not been ongoing and serious consultation. The consultation will continue. With a sunset clause, as hon. Members will know, any replacement legislation will be primary legislation that gets full scrutiny, and I made that absolutely clear in Committee. I place that on the record again now. When the sunset clause expires, it will be replaced by primary legislation in the next Finance Bill, setting out a permanent framework for apportionment rules, which will be fully debated in the usual way.
	Even if I were minded to accept an amendmentwhich I am notalong the lines proposed, neither amendment No. 5 nor amendment No. 6 would do. They go too far. They also cover very straightforward and simple changes that are a direct consequence of minor technical changes to the Financial Services Authority rules. I am sure that that was not the prime objective of the amendments, because that would establish a precedent that would not be practical or applicable in terms of minor changes to FSA rules.
	I believe that we should put in place a sunset clause. By doing it in the way that we are proposing, there remains the possibility that the Opposition can seek a debate; they still have that opportunity through parliamentary procedures. On that basis, I urge the hon. Member for Cities of London and Westminster to consider seriously withdrawing the amendment, or I will be obliged to ask my hon. Friends to oppose it.

Mark Field: I am glad that we have had a concise debate and a precise response from the Minister on this issue. He is quite right when he identifies that the Government have gone some way, through the sunset clause, to keeping the insurance industry happy. One of the main reasons for the sunset clause was the fact that this was rushed legislation.
	I am glad that the Minister has also been able to demonstrate that if anyone in the insurance industry is able to show that a double charge would take place and that they would lose out on the grounds that we have set out, there will at least be an opportunity to reassess the situation.On that basis, I beg to ask leave to withdraw the amendment.
	Amendment, by leave, withdrawn.
	Order for Third Reading read.

Dawn Primarolo: I beg to move, That the Bill be now read the Third time.
	I would like to take this opportunity to thank all the right hon. and hon. Members who participated in the Committee of the whole House and the Standing Committee. The quality of the contributions produced good, productive debate, animated exchanges and some improvement in the substance of the Bill.
	As my right hon. Friend the Chancellor outlined in his Budget back in March, the Government's economic objective is to build a strong economy and a fair society, in which there is opportunity and security for all. The long-term decisions that the Government have takengiving independence to the Bank of England, new fiscal rules and a reduction in debthave helped to shape economic stability, which in turn has created the platform for building prosperity, achieving social justice with security and opportunity for all, and maintaining investment in public services. This Bill contains measures to strengthen further stability while sustaining enterprise and ensuring fairness.
	I have made this point to the House before and I will do so again because I believe it goes to the heart of this Bill: a fair tax system is one in which everyone pays their fair share. The protection of tax revenues is imperative both in providing improvements in efficiency and enabling increased investment in public services. Tax avoidance undermines the ability of the Government to deliver their objectives and imposes increased burdens on those who pay their fair share of taxes.
	Tackling avoidance is not incompatible with maintaining UK competitiveness. In fact, avoidance undermines fair competition. Turning a blind eye while some companies obtain an unfair advantage by exploiting avoidance schemes is not the same thing as supporting and maintaining UK competitiveness.
	As I said to the hon. Member for Runnymede andWeybridge (Mr. Hammond) in Committee, competitiveness is based on the question of whether the tax system is modern and fair and whether it has appropriate rules that respond to the challenges that it faces, so that it discharges its responsibility to all taxpayers by ensuring that there is fairness in the system. As we have seen, the Bill's provisions will do just that. They reflect the Government's resolve to ensure that our tax system is both fair and competitive.
	In the Budget 2004, the Government introduced disclosure rules to tackle tax avoidance. Those rules have revealed that several areas of the tax system are at risk from high levels of tax avoidance. The Bill will close several schemes of which we have been made aware, including schemes involving the exploitation of arbitrage, employee securities, VAT avoidance and financial avoidance. The measures that achieve that make up much of the substance of the Bill and have been subject to much scrutiny in Committee.
	On arbitrage, increasing globalisation presents new opportunities for the few who attempt to evade their UK obligations. Clauses 24 to 31 and schedule 3 introduce legislation to target avoidance involving tax arbitrage. The measures catch contrived avoidance structures that seek to achieve a UK tax advantage and will apply only when a company is involved in a scheme that increases UK tax deductions because of the exploitation of arbitrage.
	Alongside the 2004 pre-Budget report, I made a statement to the House stressing how successive Governments have been perpetually presented with ever more intricate arrangements designed to avoid income tax and national insurance on the rewards from employment. Clause 12 and schedule 2 are a carefully focused response to such avoidance schemes. The measures will effectively target arrangements that are used to disguise cash bonuses and thus avoid tax and national insurance. It is important to remember that without prompt and decisive action, around 500 million in tax and national insurance would be at risk every year. The Government estimate that around 2 billion of payments were going through such schemes in 200405.
	I should also remind the House that in my statement alongside the pre-Budget report I made it clear that the Government's objective was to close down such activities permanently, initially by closing down schemes that had been identified by Her Majesty's Revenue and Customs. Furthermore, I made it clear that should further attempts be made to frustrate that intention, legislation would be introduced to combat the problem, where necessary, with effect from 2 December 2004. The response is thus fair and proportionate, given the substantial amount of revenue at risk and the history of the previous attempts made by some taxpayers and their advisers to get around legislation that was aimed at stopping their avoidance schemes. I must stress that only those who, despite these warnings, choose to avoid their responsibilities and pass a heavier burden on to other taxpayers will be affected.
	Furthermore, the disclosure rules are an integral part of the Government's strategy to ensure that there is fairness. They target the information deficit on which tax avoidance is based. They enable Her Majesty's Revenue and Customs to act faster and with a more targeted response to abuse of the tax system, thus providing an early warning about new avoidance schemes. Clause 6 and schedule 1 will improve the effectiveness of the rules by drawing on the experience of disclosures up to this juncture, extending the definition of tax advantage and simplifying the requirements on business to disclose schemes so that if a new listed scheme is designated, the tax authorities will be able to act swiftly.
	The Bill introduces important measures to promote fairness and confront tax avoidance while maintaining our competitiveness and providing certainty to businesses, allowing them to keep pace with the opportunities presented by the fast-evolving global economy. It will help to develop the macro-economic stability that is essential to our future productivity, growth and stability. It will support business while ensuring fairness, and will enable the country to sustain and build on a competitive enterprise-based economy, allowing for security and opportunity so that everyone benefits from growing prosperity.
	The Finance Bill sets in statute the measures proposed in the Budget to enable the United Kingdom to respond to and meet the challenges of a global economy. I commend it to the House.

Philip Hammond: We reach Third Reading with some of our concerns unresolved, although it would be untrue to say that no progress has been made. Certainly, the Bill is a big improvement on the one published in March. I would like to say that that is due to parliamentary scrutiny and debate, but, perhaps inevitably in the case of the complex matters that form Finance Bills, and this one in particular, which deals with anti-avoidance, the reality is that it is due to the enhanced scrutiny and discussion outside this place, between business and the Revenue. That is purely a happy side effect of the extra time made available by the general election.
	Several of the original Bill's provisions have been shown to be unworkable or too wide reaching and have been substantially amended. Unfortunately, even with the enforced break in an election year, the Revenue still appears obsessed with the need to introduce anti-avoidance legislation without notice, and hence without prior discussion. All the evidence points to the fact that pre-legislative consultation leads to better legislation, and the Bill as it now stands and the disclosure rules in the Finance Act 2004 are the most obvious and recent examples. We have seen no evidence of loss of tax through prior notice.
	The Revenue now has the disclosure rules in the 2004 Act, so it is pretty clear what is likely to be targeted. It has the press notice system, whereby it effectively gives taxpayers notice that a scheme will be closed down before the details are published. It has the tools to enable proper pre-legislative consultation of anti-avoidance measures, which it has engaged in this year to an extent. In a genuinely constructive spirit, I suggest that the Paymaster General might consider an exercise to analyse whether engaging in that way resulted in a significant loss of tax. I think the Revenue would accept that it resulted in a number of improvements to the legislation and perhaps the avoidance of embarrassing unintended consequences later.
	In addition, we received reassurances from Ministers during the course of the Bill's progress on the intended effect of the measures and commitments to keep various things under review, although I regret to say that we failed to persuade them to amend the legislation, with one small exception, to ensure that the reassurances on scope appear in the Bill.
	The reassurances that we receivedwe are grateful for theminclude the active monitoring of the effect on compliant taxpayers of the VAT warehousing scheme; the development of a workable relieving measure to cover the insurance tax rules that levy a charge when a subsidiary transfers its insurance business to its parent; the operation of the insurance tax rules as they apply to subsidiaries of life assurance companies; commitments to consultation on e-conveyancing, ensuring that new stamp duty land tax rules do not apply so that there is a multiple clawback; reviewing the scope for abolishing the Treasury consent rules; monitoring operating problems that arise on e-conveyancing, e-filing and land transaction returns; and the Government's welcome pledge to amend the draft guidelines on the gift aid scheme.
	I reiterate that we accept the need to monitor and react to tax avoidance schemes. We have two overriding concerns. First, the Bill's provisions may apply more widely than Ministers say is the case. The Government have not narrowed the scope of those provisions and have responded to criticism by adopting the maxim, Draft widely; apply narrowly. We are constantly reassured by Ministers that the examples that we have suggested are within the scope of the provisions will not, in fact, be subject to the regime in question. That is particularly true of the arbitrage provisions, which are an especially complex part of the Bill. The legislation's application to individual cases in that area will be left to Revenue officials via the issue of a notice, effectively making them the arbiters of scope.
	Secondly, even if those measures are applied narrowly, as Ministers have suggested is their intention, their refusal to change the legislation to give it a narrow focus creates a climate of business uncertainty, which undermines confidence and impacts on investment decisions, especially by overseas investors in the UK. Two aspects of a tax regime determine its relative attractiveness to business: the effective level of business taxes, and the certainty and transparency of the system. Britain's effective business taxation level is increasing at a time when many competitors are consciously moving in the opposite direction. The Bill reduces the level of certainty, transparency and accountability in the system, which represents a serious threat to investment in UK jobs and prosperity. While we acknowledge the need to address tax avoidance, the Opposition fear that the balance in the Bill is not right, and that long-term benefit has been sacrificed for a short-term tax haul.
	Corporate tax planning is a complex area, but the Paymaster General likes to paint it as a black and white issue. It is not that simplethe boundary between acceptable tax planning and unacceptable tax avoidance is not fixed. The Opposition want tax laws that enable business, and thus underpin continued economic growth in the UK, which is why we have sought to introduce changes to the Bill, all of which the Government have blocked. Those changes included a binding statutory clearance system to remove the uncertainty that the Government have introduced with the tax arbitrage regime; the early introduction of real estate investment trusts; amendments to the stamp duty land tax rules to avoid impediments to commercial intra-group re-organisation; and changes to schedule 7 to protect compliant taxpayers from the downside risk of being caught by the wide-ranging changes; and proposals to set in train a far-reaching review of tax law to simplify and clarify it. The Government rejected all those proposals.
	We remain concerned that the Bill's scope is too wide and its operation too uncertain to be conducive to a favourable investment climate for international business. We are grateful for the reassurances that we have received during the passage of the Bill, although we are naturally disappointed that they have not been incorporated in it. We await with interest the plethora of regulations that will emerge from clauses 6, 13, 17, 45, 47, 48, 50, 66 and 67, and from schedules 6, 7 and 9. As the Paymaster General would expect, we shall monitor carefully with people outside the House the practical implementation of the Government's assurances and the Bill's impact on the United Kingdom's business and investment climate. We owe nothing less to the people of this country, who depend on a competitive investment climate for the jobs and prosperity that underpin their future and, indeed, for the stream of revenues to the Exchequer that will ensure that our public services can be maintained to the standard that we expect and demand in the 21st century. Only through economic growth can we achieve that, and only through continued investment in the United Kingdom can we deliver that economic growth.

Christopher Huhne: I share many of the sentiments expressed by the hon. Member for Runnymede and Weybridge (Mr. Hammond), particularly about the measures that the Treasury has introduced to deal with tax avoidance. The scope of those measures means that we often have to rely on the word of the Paymaster General, who is effectively telling us, Trust me, I'm the Paymaster General. That is an enticing invitation given that she has been in that post for a lengthy period, but she will not occupy it for ever.
	These powers might be used by people with a less beneficent view than the one that she expresses towards taxpayers. It is unfortunate that the checks and balances in the Bill are not stronger, because the scope of the measuresI am thinking particularly of schedule 8 and transfer pricing, for exampleand the powers that we have given to HMRC are very substantial indeed.
	In another neck of the woods entirely, I regret, and I believe we will have in our constituency surgeries a substantial number of complaints about, the Treasury's unwillingness to be a little more flexible on the gift aid provisions relating to museum admissions. Setting a minimum of one year or requiring an excess charge of 10 per cent. over the entry price means that a number of smaller museums will suffer considerable problems.
	The performance of those on the Treasury Bench on the issue of REITsreal estate investment trustsreminded me of the recent performance of the Paymaster General in dealing with another classic Treasury case, that of tax credits, where the issue is not the objective of a particular policy, but its implementation. REITs is another case of the Treasury failing to deliver on promises made time and again to the House in respect of a measure that has wide cross-party support across the Liberal Democrat, Conservative and Government Benches. Once again, the Treasury has not delivered, on a measure that would provide a real prospect of the financial services industry being more competitive in an area where a number of other countriesthe United States and various continental countrieshave already introduced similar measures.
	On simplification of the tax regime, we were disappointed that the Treasury was not more open-minded in introducing a proposal for a tax law commission. That has wide support among professionals, who are after all the people advising us on the matter and also HMRC. The tax law commission would go beyond the tax law rewrite project in being able to propose ways of simplifying the tax code that would command broad support. The argument from the Treasury Bench was that the commission would pre-empt the powers of the House of Commons. I do not believe that for a minute. It would be a professional body that could put forward proposals, and the Government could accept or reject them.
	The insurance provisions tell us more about the motivation of the Bill than almost anything else. A substantial change is proposed in the basis of the taxation of the life assurance industry through secondary regulation powers given to the Treasury without adequate consultation or scrutiny in the House. That tells me that the Treasury is rather more worried about the prospect of revenue than about the prospect of good tax legislation.
	Finally, I thank the Clerks for all the support they have given my hon. Friends and me in tabling amendments. I thank the Economic Secretary for the assurances that he gave us earlier today on the qualified investor schemes, which will be of benefit to the City and the financial services industry. I thank you, too, Mr. Deputy Speaker, for your support through these often arduous proceedings.
	Question put and agreed to.
	Bill accordingly read the Third time, and passed.

London 2012 Olympic Bid

Jack Straw: With permission, Mr. Speaker, I should like to make a statement on the Olympics. I do so in the absence of my right hon. Friend the Prime Minister at Gleneagles and of my right hon. Friend the Secretary of State for Culture, Media and Sport in Singapore, and in my capacity as Chairman of the Cabinet Committee on Britain's bid.
	All of us know the news; each of us will be able to recollect for the rest of our lives exactly where we were when the president of the International Olympic Committee, Jacques Rogge, read out those magical words: The city which will host the 2012 games is the cityof London. But my right hon. Friends and I thought that the House would welcome this early opportunity to send its congratulations to all those involved in what is a magnificent achievement for the United Kingdom as a whole in securing not only the Olympics but the Paralympics.
	Our first thanks must go to the International Olympic Committee for the confidence that it has shown in the United Kingdom's bid and we should salute the strength of, and support for, the other four bids on the final shortlist.
	When the original discussions took place over two years ago as to whether the Government should back a bid for 2012, there was enthusiasm in principle, but much anxiety about whether in practice London could win. We knew even then that we faced extremely tough competition. It is a tribute to the extraordinary dedication and imagination of all those involved to have taken the project from just a dream to the reality that it becomes from today. The work of Lord Coe, Keith Mills and their team has been immense. Barbara Cassani set the foundations, but Lord Coe has taken the inspiration and energy that made him one of the world's greatest ever athletes and channelled it into building a powerful bid for London. His performance here, as it was on the track, has been phenomenal. On behalf of all Members, I pay tribute to him and to all those involved with him.
	London's bid was built on a special Olympic vision. That vision is of an Olympic games that will be not only a celebration of sport but a force for regeneration. The games will transform one of the poorest and most deprived areas of London. They will create thousands of new jobs and homes. They will offer new opportunities for business in the immediate area and throughout London.
	But they are not just a games for London. They will leave a legacy for the entire country. Olympic competitions will be held in Glasgow, Cardiff, Weymouth, Birmingham, Manchester and Newcastle.
	One of the things that made our bid distinctive and successful is the way in which it reaches out to all young people in two important respects: it will encourage many more to get fit and to be involved in sport and, whatever their physical prowess, to offer their services as volunteers for the Olympic cause.
	The nation has united behind this vision. The latest polls show that 80 per cent. of people backed the bid and more than 3 million people sent individual pledges of support. There has been a terrific partnership between the Mayor of London, Ken Livingstone, and the Greater London authority; the chairman of the British Olympic Association, Craig Reedie, and all his colleagues; and Mike Brace, chairman of the British Paralympic Association, and his colleagues.
	Hon. Members from across the political spectrum have contributed to the success of this bid. Leading the Government's efforts have been the Prime Minister and my right hon. Friend the Secretary of State for Culture, Media and Sport. I know that I speak for all colleagues when I say that I have personally witnessed, as have we all, her extraordinary personal commitment in tirelessly championing London's cause. Officials at every level in her Department, supported from elsewhere in Government, have worked fantastically hard and with great skill.
	My right hon. Friend the Secretary of State and my right hon. Friend the Minister for Sport have lobbied hard in Singapore. They were joined there on behalf of the official Opposition by the hon. Member for Faversham and Mid-Kent (Hugh Robertson) and on behalf of the Liberal Democrats by the hon. Member for Bath (Mr. Foster). On behalf of the Government and the bid team, I thank hon. Members for the enthusiastic cross-party support for the bid.
	Today we can celebrate. From tomorrow, we start to realise the Olympic vision in our bid. The Prime Minister has already announced the appointment of my right hon. Friend the Secretary of State for Culture, Media and Sport as Minister for the Olympics. Lord Coe will become chair of the organising committee. Keith Mills will help to oversee the transition. Before the summer recess, the Government will introduce a Bill to set the statutory framework that we need to ensure the delivery of a successful games. Work to improve London's transport network will continue. A new Olympic lottery game will start soon. Tenders for Olympic-related work in east London have already been submitted and major contracts that relate to the games and the broader infrastructure will be concluded in the next few weeks.
	Securing the games is one of the greatest international prizes for any nation. Like every hon. Member, I have always been proud of my country but today I am prouder than ever.

Theresa May: I thank the Foreign Secretary for prior sight of his statement. It is truly a pleasure to rise to the Dispatch Box today because it is a proud day, with a great result for London and for Britain. It is literally brilliant news.
	Now is not the time for qualified praise or cautious welcomes. Now is the time for heartfelt congratulations and thanks to all those responsible for bringing the games to London. That includes the Prime Minister, who has proved that his schmoozing skills are truly of an Olympic standard. Thanks are due to the Secretary of State for Culture, Media and Sport and her ministerial team for all their hard work, to the Mayor of London, and, above all, to my colleague Lord Coe, who has proved an inspirational leader in putting our bid together. The efforts of his team have been astounding. I am sure that all my hon. Friends agree that the presentation that Lord Coe and his team made today in Singapore was truly inspirational.
	I also offer our thanks to all the sporting organisations and individual sportsmen and women who have worked so hard to deliver a stunning result. Of course, the Olympics will provide a fantastic opportunity to showcase to the world all that is great about Great Britain: our country, history, music and culture, not forgetting our fine food and drink. I am sure that all the world leaders gathering today in Scotland for the G8 summit will be able to testify to the quality of British cuisine.
	Naturally, we have some detailed questions about the preparations for the games, especially the Bill that will be introduced shortly. We want to avoid the overruns that occurred in Sydney and Athens and to scrutinise projects to ensure that the taxpayer receives value for money. We are keen to ensure that the concerns of residents and especially businesses in the Lower Lea valley are understood and addressed. We will want further guarantees about the ability to deliver the transport and infrastructure links on time and to budget. We are determined that mistakes such as the Dome and Picketts Lock must not be repeated.
	When can the Government give us more detail about the organising committee and the compensation for businesses and home owners affected by the bid? Will the Government reconsider their decision to take a tax take on the Olympic lottery game? Will they fulfil their promise to establish a national sports foundation, which could be such a help to our budding Olympic athletes?
	Those detailed discussions are for another time, especially as I am reliably informed that Stratford is still partying. Today is about celebration, optimism and hope. Above all else, we want to ensure that the games inspire our young people. Sport has the ability to motivate and enthuse young people in a way that is almost magical: the thrill of winning that race, the excitement of achieving things that young minds and bodies never thought possible, or simply the sense of joy from being part of a team. Those are things that too many children in our country lack and too many never experience. Many children could benefit hugely from the power of sport.
	Conservative Members hope that, above all, we can use the games to inspire a new generation to run faster, leap further, reach higher: to believe that they can achieve their goals if they only dare to try. The power to ignite a spark in our country's young that will cause them to put down the video game or the iPod and take part in a sport could do more to deal with obesity than a million pages of instructions from the desk of an education Minister.
	I hope that there are young people in the UK today who will now be inspired to achieve their sporting potential andwho knowseven to stand on the winners' rostrum in London's Olympics in 2012.
	We can learn a great deal from this. Moments like this can unite nations and inspire us to see the power of the Olympic games to rouse people in a common and optimistic purpose. Today is indeed a great day, and I am sure that the London Olympics in 2012 will be truly the greatest sporting event in the world.

Jack Straw: I thank the right hon. Lady for what she has said. I speak for all Labour Members when I say that I am delighted that so many people have contributed to the success of the games, but there is no doubt that the man who made the greatest difference of all is her noble Friend Lord Coe. We should all recognise that. According to reports that I have received from, among others, my right hon. Friend the Secretary of State for Culture, Media and Sport in Singapore, one of the things that made the difference was the strength of Lord Coe's presentation, as the right hon. Lady pointed out.
	The right hon. Lady asked a number of detailed questions, many of which willI hopebe answered when the Bill is published shortly. Lord Coe will chair the organising committee, and alongside that but separately there will be an Olympic delivery authority.
	The right hon. Lady is right to say that the Bill ought to have extensive parliamentary scrutiny. That does not constitute churlishness about the success that we have achieved today, but accountability and scrutiny will be a way of ensuring that what we have promised British young peoplethe British people, indeed, and the worldwe will deliver, on budget and on time.

Menzies Campbell: I associate myself, and my right hon. and hon. Friends, with all that the Foreign Secretary said. I am not sure that I can match the lyricism of the right hon. Member for Maidenhead (Mrs. May). Perhaps I can content myself with saying that the Foreign Secretary and indeed the right hon. Lady were right to underline the part played by Lord Coe in ensuring that the games came to London.
	The Foreign Secretary mentioned Craig Reedie, who, I believe, will retire this month, after 13 years as chairman of the British Olympic Association. He can hardly have expected to have a better basis on which to leave.
	I truly believe, and hope the Foreign Secretary will accept, that the games have the capacity to leave an indelible legacy not just to London but to communities throughout the United Kingdom, and to our great sporting nation. As the Foreign Secretary pointed out, some of the events will be held outside Londonand where better to hold a football event than Hampden Park, a destination for occasional hopeful pilgrims from Scotland? I hope that it will not be thought unduly selfish to say that, if golf is introduced in 2012, as has been suggested, I can envisage St. Andrews providing a proper opportunity for it.
	London is one of the world's most diverse cities, with more than 200 communities and more than 300 languages. That cultural richness will provide a proper context for a package of cultural events surrounding the games, and those events in turn will help to enrich the Olympic movement.

Jack Straw: I greatly welcome the remarks of the right hon. and learned Gentleman. It is fair to say that he is probably the only Member of the House who has had personal experience of competing in the Olympics, as he did in 1964 in Tokyo, and as he did in the Commonwealth games two years later. He is right that with opportunities come great responsibilities, and I repeat the point that I made a moment ago about the need for us to ensure proper scrutiny of the measures.
	As we are handing out the compliments, I also want to underline my appreciation of my right hon. Friend the Secretary of State for Culture, Media and Sport, who has put in an astonishing amount of work, and of my right hon. Friend the Prime Minister, who, with all his other duties, not least those in relation to the G8, took the time to go early to Singapore, to lobby hard, and to fly back through the night to be ready for Gleneagles. That is a tribute to him. The collective effort tipped the balance and ensured that we got those 54 vital votes.

Lyn Brown: I can honestly say that I do not believe that representing West Ham will get better than it feels today. I am finding it difficult to express how overjoyed I am and what this means to the people of my constituency in terms of the jobs, opportunities and regeneration that will be brought to the area. We are absolutely delighted, and Stratford is still partying as we speak. I expect that the party will continue for the next seven years or so.
	Will my right hon. Friend please congratulate on our behalf all those who are not important enough to be mentioned here today but who have played a vital and pivotal role in bringing the bid to a successful conclusion? I refer to people across London and the country, in local, regional and national Government, and in our communities and schools, including the children who sent their thanks, hopes and dreams to the International Olympic Committee and who did so well in representing this country's hopes and desires. Can we also make sure that the regeneration of the Olympic city brings to the east end, the rest of London and the rest of the country the revitalisation that is needed?

Jack Straw: I thank my hon. Friend. Representing that area certainly will get betterit happens to be an area that I know well, as she knows, as I was brought up not far from Stratford. That part of London has long deserved a break and will now get it at long last. She is right to say that there are many otherstoo many to namewho deserve credit. This was a dream and an idea that from almost a standing start two years ago suddenly took hold of the east end and the rest of the country. Now that we have won the contest, we must deliver. One of the reasons that we won was the lasting legacy of the bid. We call it regeneration, but it is actually about transformation of an area, and above all transformation for the people of the area.

Derek Wyatt: As chairman of the all-party London 2012 group, may I add my congratulations to everybody concerned? I want to pay tribute to two people who have not been mentioned so far. A special tribute should be paid to Mike Lee, the communications director, who has done an astonishing job on little money, and whose contribution has been extraordinary. Alan Pascoe, another former Olympic medallist, has also done an extraordinary job. The team of past and present Olympic medallists have done a fantastic job in wearing the Union jack with pride. Today's vote was rather like a general election, and we have been rather good at those of late.
	I want to ask three questions. First, could specialist sports schools become specialist Olympics sport schools, so that they can act as the hub for the Olympics in their communities and be used as the spoke from which we can build outwards, as that is what we need?
	Secondly, for those of us who remember the celebration of the millennium, when there were more than 300,000 people in Hyde park and The Mall, would it not be wonderful to have an opening ceremony that set the 21st century alight, not just in the stadium but across Londonand a party too? That would be the spirit in which we could ignite a party, and all Olympic cities could share in the opening night. That would be fantastic.
	Finally, will my right hon. Friend bear it in mind that, when de Coubertin set up the Olympics, there were gold medals for music, art and poetry? That is something that we could redefine. If we can have Nobel prizes for literature, we can also bring back the spirit of art, music and poetry to the games for the 21st century.

Mr. Speaker: Order. Before the Foreign Secretary answers, may I say that this is not an opportunity for a speech. Hon. Members are supposed to be asking questions, so a brief supplementary is fine.

Jack Straw: I thank my hon. Friend the Member for Sittingbourne and Sheppey (Derek Wyatt) for what he said. He is right to pay tribute to Mike Lee and Alan Pascoe. I have seen their work myself. I shall make sure that his first suggestion is actively considered by my right hon. Friend the Secretary of State for Education and Skills, and the other two suggestions by Lord Coe's committee.

Iain Duncan Smith: As the Member of Parliament for an area that I believe and hope will materially benefit from the successful bid, may I ask the Foreign Secretary to pass my congratulations, and those of my constituents and the borough, to Lord Coe, our noble Friend, of whom we are very proud today? We congratulate him and all his team on their fantastic efforts in turning round what was once perceived as a bid with no hope into a bid that has won the day. I also remind the House that David Beckham was educated in my constituency, so it was clearly Chingford wot done it.
	Will the Foreign Secretary ask the Prime Minister, whom we also congratulate, to come to the House immediately next week to make a statement, so that we can discuss fully exactly what happened when he met President Chirac at the G8? It is important to get that on the record. In the meantime, will the right hon. Gentleman pass on our congratulations on a fantastic bid?

Jack Straw: I know Chingford well, as I was brought up just across Epping Forest, and the right hon. Gentleman and I are probably alone in resenting the slights on the heroes of Chingford, including David Beckham, whose skills are a testament to the education that he received. All the effort helped, including the effort that he put in. May I also say that President Chirac of France was magnanimous in what he said when he arrived at Gleneagles, in congratulation for Britain's and London's success. I hope that, as the Prime Minister has said, we would have been magnanimous had we, as many of us expected, been in the reverse situation.

Jim Dowd: I endorse what my right hon. Friend has said and congratulate everybody involved in the bid. I ask him to pay particular regard to the role of Ken Livingstone and the Greater London authority. It just shows what happens when we give someone a proper job to do. I also remind him that Transport for London has done much of the work in devising schemes for introducing the infrastructure that will make the games such a success. Although the priority now is to ensure that, between now and 2012, we put everything in place for what I am sure will be the greatest games on earth, during that time, we should also ensure that we maximise the benefits for the rest of the country from the games, and more particularly the benefits for the community and the country as a whole long after the Olympics have gone.

Jack Straw: I am happy to pay tribute, as I did in my statement, to Ken Livingstone and Transport for London. Another aspect of the bid, which is important to all of us, is the way in which it reaches out beyond London. I mentioned in my opening statement that certain citiesthe Dorset port of Weymouth, for examplewill participate directly in the games, as major activities will be based there. However, we want the whole country to benefit from the running of the games, as in the provision of practice facilities, which do not have to be in London. Indeed, in many cases, it would be better if they were not. We have discussed with the organisers over many months how even some of the physical facilities could be transferred to other parts of the country. A great deal of thought and effort is being devoted to that.

Ian Paisley: May I, on behalf of the vast majority of people in Northern Ireland, congratulate those who worked so hard to do a difficult but fine job? We are all grateful to them. This is not the time to say other things, but I would like to ask the Foreign Secretary to take a leaf out of the Bible. In paradise there was a river that went into four heads, which together watered the whole earth. He made it clear in his statement that he does not intend to bring any of this good watershould I say holy waterto Northern Ireland. I hope that when we get to the Olympic year, Northern Ireland will be included and not left out, for this kingdom owes a lot to the people of Northern Ireland.

Jack Straw: It does, indeed, Mr. Speaker, but the hon. Gentleman would be the first to say that we live in the United Kingdom and that we are all part of the whole, even though a small part of the territory is divided by some water from the rest. We won because of the immense enthusiasm of people across the United Kingdom. Let me say that we are very grateful for the enthusiasm that people in Northern Ireland have shown. I will also personally ensure that Lord Coe is made fully aware of the need for direct participation, if it is possible to achieve it, by people in the towns and cities of Northern Ireland.

Nick Raynsford: I thank my right hon. Friend for his statement and wholeheartedly endorse the tributes that he rightly paid to all those responsible for delivering this magnificent result. It is a result that will be welcomed not just in areas such as my own that will host a number of Olympic events in 2012, but throughout the whole country. My right hon. Friend rightly focused on the importance of London's bid for regenerating an area in east and south-east London that has suffered disproportionately from unemployment and poverty. It is indeed important to seize those opportunities. I put it to him that it will be essential, in the creation of the many jobs that will result from our success, that every effort is made to secure employment and training opportunities for young people who are currently without a job in those areas. That will maximise the regeneration benefits.

Jack Straw: I agree with what my right hon. Friend says. Sometimes in the past, infrastructural activities have employed many people, but not many local people. That was one of the criticisms made of early 1980s activity in Docklands, which was later righted. I hope and believe that the new authority as well as the organising committee will pay particular attention to the need to provide opportunities for local people.

Angela Watkinson: As an outer-London MP, I look forward to and hope to see improvements to sporting facilities in some of the schools and clubs in my constituency, which should aid job creation in the construction and leisure industry. ButI am sure that the Foreign Secretary could hear the but creeping up on himthe Crossrail route conflicts with the London Olympic site at Pudding Mill lane. Does the successful bid mean that Crossrail is going to hit the buffers?

Jack Straw: I shall have to invite my right hon. Friend the Secretary of State for Transport to comment in detail about that. I do not think so, but a Bill will be published shortly and there will be every opportunity to consider the matter in the House.

Joan Ruddock: I add my congratulations to those of all my colleagues on this successful bid. Will my right hon. Friend congratulate Transitions, the contemporary dance company from my constituency, which performed in Singapore this week? It was part of our triumph. I also ask him to ensure that London's diverse performing arts community is fully engaged and involved in the preparations for the games.

Jack Straw: I am delighted to congratulate Transitions; its activity and the depth of diversity in London was another reason why we won this bid. We could honestly say that there was not a single country in the world participating in the bid that did not have residents in London who were able to turn up, as a ready-made part of the crowd, to cheer them on. I should alsoas I meant to do earlierthank the London schoolchildren who went to Singapore, who added to the strength and attraction of our bid.

Simon Hughes: My hon. Friend the Member for Richmond Park (Susan Kramer) and I have particular reason to want to pass on our congratulations to the Mayor of London, whose vision for the east end has enjoyed cross-party support, and to which we subscribe. Does the right hon. Gentleman accept that one outcome of the result of this bid should be not only greater diversity in London by 2012, but greater social equality? As has been mentioned, may every school have a sports coach, so that every youngster has the opportunities that tonight they may be dreaming of?

Jack Straw: I am sure that my right hon. Friends will consider the last suggestion. The hon. Gentleman knows Stratford, in the east end; I know it, too. This regeneration will itself lever up opportunities, and in doing so it will help to bring the equality of opportunity, and of living standards, that we all want.

Mark Lazarowicz: I am pleased to tell the Foreign Secretary that businesses in my constituency have already won contracts for the preparatory work resulting from this bid, which shows how the entire country can get economic, as well as sporting, benefits from the games. May I urge my right hon. Friend to make certain that the organisers continue with the good work of ensuring that the entire country derives benefits from this successful bid? I should point out that Edinburgh has a lot of experience in hosting big events, particularly recently. May I also urge him to ensure that bringing these wider benefits to the entire country is one of the Government's priorities in building on today's wonderful news?

Jack Straw: Yes.

John Whittingdale: May I echo the congratulations offered to Lord Coe and his team, and thank the Foreign Secretary for recognising the cross-party support that has always existed for the bid? He will doubtless agree that one key element of our success was the Government's total commitment to the bidfrom the very topalong with that of the Opposition. But does he also agree that the hard work is only just beginning, and that a successful games will require the continuing commitment of all Ministers and, indeed, of all parties in this House?

Jack Straw: There has been a lot of hard work to get this far by everybody concerned and by all parties. But yes, we now have a real responsibilitya very heavy obligationto ensure that the undertakings that we gave to the International Olympic Committee and to the people of Britain are delivered on. That will involve even harder work than we have undertaken until nowby Government, by Opposition, by everybody. We have got to do it.

Harry Cohen: I can disclose that I ran with Seb Coefor a vote, when he was a Member of this House. Will the Secretary of State convey my congratulations to Seb Coe and his team, and to everybody involved in this successful bid? Will the Government ensure that the resources flow into east London without delay? We must keep control of construction costs, and in doing so it is important that we do not leave the work until the last minute. Also, will the Government give an early commitment that this will be an Olympics for the many, not the few, and that ticket prices will be reasonable for east London residents and, indeed, for all UK residents?

Jack Straw: Some of the funding arrangements have already been announced. Indeed, some of them had to be made clear to the IOC; had they not been, we would have had no chance in the bid. I could read them out, but I will not as doing so would detain the House. However, the one thing that I cannot domy hon. Friend would not expect me tois anticipate decisions that my right hon. Friend the Chancellor of the Exchequer will have to take in future spending rounds.

Jacqui Lait: May I add my congratulations to the bid team? I assure the Foreign Secretary that I shall certainly remember where I was when the announcement was made because I was able to slip away to Trafalgar square, and it was a stunning and wonderful moment.
	Will the Foreign Secretary ensure that the strong financial management with which the bid team secured our success will be applied, to the benefit of the UK and of Londoners in particular, to the legacies that will ensue in terms of sport, culture and transport?

Jack Straw: Yes, we must ensure that that happens, otherwise we will not deliver either the games or the legacy. It is absolutely essential that we deliver both.

Meg Hillier: I want to add my congratulations to the bid team, and I especially welcome the facilities that will be built at Hackney Wick in my constituency. Hackney has waited a very long time for the major transport improvements that will be in place by 2012. Will my right hon. Friend raise with other Ministers the matters highlighted by my right hon. Friend the Member for Greenwich and Woolwich (Mr. Raynsford)? He spoke about the future employment opportunities for young people in his constituency, and the need to provide skills training for them. Will my right hon. Friend consider making the London games a real people's games by developing a mutual company, in which citizens of this country can buy shares and so fully take part in the Olympic spirit?

Jack Straw: I shall certainly ask Lord Coe to consider my hon. Friend's final suggestion, although it assumes that the Olympic committee will make a profit. I do not have a briefing to that effect, but if she knows something that I do not, my right hon. Friend the Chancellor would like to hear from her.
	I agree with her on the other points that she made. There have been many plans for improving transport in Hackney. On the whole, they have not been delivered, but at last they will be.

Angus Robertson: On behalf of the Scottish National party and Plaid Cymru, I warmly welcome the news, and congratulate London on its successful bid. [Interruption.] As a London-born Scottish Nationalist MP, I speak on behalf of all my colleagues. I join in commending the IOC, Lord Coe and the bid organisers on their efforts, as well as the Government. Will the Foreign Secretary look closely at lottery and other funding streams to ensure that the London Olympics are the success that they should be, and that other parts of the country will not lose out?

Jack Straw: The hon. Gentleman has made the very important admission that he was born in London. The parliamentary guide says only that he was born. [Laughter.] It gives his date of birth, but skims over the precise location very quickly. It states simply that he was educated at Broughton high school in Edinburgh. However, I think that the hon. Gentleman's revealing admission merits a wider audience among Scottish voters. He is a Londoner with a Scots accent.
	I am very grateful for the approbation of the Scottish Nationalists and Plaid Cymru. As I have said, we will certainly do our best to ensure that the benefits of the Olympics, in the lead-up to the games and beyond, are shared across the UK.

Tom Levitt: Buxton community school is already established as a sports specialist school, and the St. Philip Howard school in Glossop will take on that status from October. Other colleagues have mentioned that the specialist schools present a framework on which excellence in the British team in 2012 can be built. However, they also noted that we must build on that framework soon. Does my right hon. Friend agree that we cannot wait and start building our Olympic team in five years' time, as the members of that team are in our schools today?

Jack Straw: I accept what my hon. Friend says. Many hon. Members have sports specialist colleges in our constituencies, and those institutions have raised sports standards and educational standards as a whole. My right hon. Friend the Secretary of State for Education and Skills will be looking at further ways in which we can make use of the Olympic opportunity to raise sporting standards across the country.

Mark Pritchard: I welcome the Foreign Secretary's comment that the games are not just for London, but what plans do the Government have for Shropshire? Lilleshall national sports centre is in my constituency, and the right hon. Gentleman will know that it is accredited by the British Olympic Association. I know that he listed Birmingham in his statement, but I encourage him to re-examine what he said, as I think that he overlooked Shropshire.

Jack Straw: I am sure that I overlooked Shropshire. The centre will be used, but I am sorry that I cannot give specific details. I said earlier that all sorts of facilitiesnot only those that I mentionedwill be used as practice facilities at the time of the games and beyond.

Khalid Mahmood: May I join my right hon. Friend in thanking all those who have worked so hard to ensure that we were successful in our bid for the games, especially my right hon. Friends the Prime Minister and the Secretary of State for Culture, Media and Sport? I also thank my right hon. Friend for mentioning that other cities would be involved in the bid and may I offer him the city of Birmingham, especially my constituency of Perry Barr where we have the Alexander stadium, the high performance centre, the Beeches pool and the Perry Beeches school, four lots of playing fields, and Great Barr and Handsworth leisure centres, to ensure that the bid is a truly national bid?

Jack Straw: It is, and Birmingham will be involved.

Nicholas Soames: In the words of my right hon. Friend the Member for Maidenhead (Mrs. May), I am inspired to jump higher and leap further by this news. May I ask the Foreign Secretary to pass my warmest congratulations to Lord Coe? I am not in the least surprised, because he was my Parliamentary Private Secretary for two years. May I press on the Foreign Secretary the extensive equestrian arrangements in Mid-Sussex? As everybody else has asked for the Olympics to come to their constituency, I had better ensure that they come to mine.

Jack Straw: I thought for one moment that the hon. Gentleman was about to offer to participate in one of the sports, without the use of a horse. I will of course ensure that his proposal is passed on to his former PPS.

Clive Efford: May I congratulate my right hon. Friend on his luck in being in the right place at the right time to make probably the easiest statement that any Minister has ever had to make? Some people may still harbour doubts about the bid. Some doubted whether we would win, but those who doubted that we should bid have been proven wrong. I was with 500 children from schools in Greenwich to hear the result announced and anyone who harboured doubts needed only to look at the expressions on their faces when the result came through to know what winning meant to them.
	May I put down a marker? Up and down the country a community of people are involved in voluntary and not-for-profit organisations delivering sport to young people. They could become an army of ambassadors on behalf of the 2012 Olympics by encouraging participation in sport for all ages. When we put together our strategy for 2012, let us not forget those people.

Jack Straw: My hon. Friend is right. As I said in my statement, one of many reasons why our bid won was the way in which it sought to reach out to young people beyond those who aspire to take part formally in the games, to encourage participation in sporting activity and exercise by many more young people and, for those not taking part in physical activity, to encourage volunteering and a sense of giving to other people in society. These games should make a big difference to that.

Vincent Cable: Does the Foreign Secretary accept that the real enthusiasm of many of my constituentsI represent another sporting mecca in south-west Londonis tempered by some anxiety about costs escalating completely out of control as they did in Athens and at earlier games? When he said that the games would be delivered on time and within budget, was he confirming that the Government were planning that the costs would not rise above the 4.9 billion agreed?

Jack Straw: I do not wish to disparage what Athens did, because the games were run successfully, but there are many differences between the offer that the Athens Olympics committee made and the offer that London made and in the basic infrastructure that each city started with. We have had experience of running if not games of this size, events such as the Commonwealth games. I was directly involved in much of that, as I have been in some of the planning for this bid. I cannot say for absolute certain whether the works will be completed on budget. They have to be completed on timelet us be clear about that; it is an absolute imperativebut the financial systems that are being put in place will be robust, as has been the planning that has already been done. I say again that I hope that the House, in its euphoria and enthusiasm for the bid, does not fall down on its responsibility properly to scrutinise the Bill, and that both sides of the House ensure that while there is no interference in the work of the organising committee and the authority, there is effective accountability of both those bodies.

Chris Bryant: The Rhondda is a long way from the east end of London, but many youngsters swimming with the Rhondda swimming team at Ystrad baths and in Bronwydd will be excited at the prospect that they may be competing in the east end of London in 2012. In particular, the grandson of Alec Jones, one of my predecessors, hopes to take part as a triathlete, so there is a sense of excitement. Will my right hon. Friend confirm that one of the most important elements of the bid, which has not yet been mentioned much, was the Paralympic bid, and that Britain brought something important to the Olympic movement when it brought the Paralympics on board? Will he ensure that it remains important all the way through our success?

Jack Straw: Yes I will personally ensure that. Indeed, throughout my statement, I sought to mention that it was a successful bid not only for the Olympics but also for the Paralympics.

Kali Mountford: Just as the joy and pride extends from London to the rest of the country, so the benefits should flow equally. My right hon. Friend has pointed out the training benefits and other Members have looked at how contracts can be won to benefit their constituencies. Will my right hon. Friend also look across Government at ways in which we can promote all the great British talents? I can indicate some in Yorkshire, especially in technology, science, design, textiles and the marvellous Yorkshire food that could be promoted by this opportunity.

Jack Straw: Yes. We could put in a bid for only one place and that was London, although earlier bids went in from Manchester. We all had to get behind London. I had a direct Government interest in the Manchester Commonwealth games four years ago as well as an interest as a constituency Member of Parliament representing Blackburn, just 30 miles away. Among many other things, what was great about the Commonwealth games in Manchester was the support we received from the rest of the country. Specific and tangible benefits will flow elsewhere, but we should be joyous about the fact that the games will come to the capital of the United Kingdom.

Richard Bacon: Is the Foreign Secretary aware that the UK has produced a number of world champions in the sport of gliding and that were the British Olympic organising committee to decide on gliding as the new sport rather than golf, as has been suggested, South Norfolk, which contains the largest glider airfield in the country would be a very good place to do it?

Jack Straw: As my hon. Friend the Under-Secretary of State for Culture, Media and Sport, the Member for Stalybridge and Hyde (James Purnell) says, that deserves a medal for ingenuity.

Clive Betts: I give a total welcome to our successful bid, but may I ask my right hon. Friend to give two assurances? The first is that the resources and finance for the games will not be found at the expense of community sporting facilities and activities up and down the country, but rather that the games will be used as a basis to enhance community sport and the fight against obesity. The second is that resources will not be diverted from sporting facilities and activities in the regions. As my right hon. Friend has already said, the regions will benefit from the games, not least my city of Sheffield, with its magnificent sporting facilities, which, although they will not stage any of the events, stand ready to host one of the major training camps that will be held before the games.

Jack Straw: It is not for me to announce future public spending decisions; as my hon. Friend will appreciate, that is for my right hon. Friend the Chancellor of the Exchequer. From discussions with my right hon. Friend the Secretary of State for Culture, Media and Sport, I know that she is concerned to ensure that expenditure on the games is, so far as is possible, seen as additional, but having won the games for the United Kingdom we cannot start to be competitive between one area and another. I represent a constituency that is even further away from London than my hon. Friend's, and it is my belief that the whole of the United Kingdom will benefit from the games.

Andy Reed: My right hon. Friend deserves to have given the statement this evening. Those of us who were lobbying before the Government backed the bid know of the important role that he played in chairing the Committee that gave the Government's backing to the bid. Without that Government backing, the bid would not have even got to the starting point. So it is important to recognise his role.
	My right hon. Friend has already mentioned some of the places that will benefitsuch as Loughborough university, which the Chinese team have already looked around and where they will probably base themselvesbut does he recognise the role of the volunteering? I chair the National Strategic Partnership for Volunteering in Sport, and 26 per cent. of all volunteers in this country are involved in sport. If they cannot compete at the Olympics, they deserve the chance to volunteer.
	For those who want to compete, however, is this not the opportunity to make a real step change in how we offer sport in this countryfrom schools and community sports to the elite performance centre at places such as Loughborough, Sheffield and Bath? Now that the country is behind us, is this not a golden opportunity to make a step change and to increase the fundingthere is always a bit at the endto match the aspirations that the British people now have?

Jack Straw: I am very grateful to my hon. Friend for what he says. It has been a privilege to chair the Olympic Committee and to see the fantastic work done by others, including my ministerial colleagues and the Prime Minister, but I also thank my hon. Friend for getting at some of us to ensure that what was simply an idea two and a half years ago that perhaps we should have a go at bidding gradually generated into something that became a formal bid and will be the Olympics in 2012. He is right to talk about the opportunities. I think that they will be taken to improve even further our sporting prowess and success.
	As for future funding, as my hon. Friend knows, that is a matter for my right hon. Friend the Chancellor of Exchequer.

Sadiq Khan: As a lifelong Londoner, I am extremely proud and joyous about today's decision. Does my right hon. Friend agree that one of the reasons for the success of the bid is that London is the most diverse city in the world? Does he agree that it is important that all our diverse communities benefit from the lead-up to the games, during the games and from their legacy? Finally, does he agree that this is a good example of the success of devolution because the person who planted the seed that led to the bid is the Labour Mayor of London, Ken Livingstone?

Jack Straw: It is a good example of the devolution that we have introduced, but my hon. Friend makes an even more important point about diversity. London is the most diverse city in the world; but, given the breadth of its diversity, it is more at ease with itself than any other city that I can think of, so winning the bid was not just about numbers. Yes, we have had our difficulties in the past and, yes, things are not perfect; but, as I know, as someone whose London home is in the heart of one of the most diverse areas of this city, it has achieved far better and more relaxed relations than many others have been able to do.

Andrew Dismore: My right hon. Friend rightly acknowledges the great contribution made to the bid by London's diversity. Not only will every nation that comes to compete have its own home crowd, but does he agree that the diversity of London and, indeed, the whole country will dramatically contribute to the strength of our team competing in 2012, and that we are therefore much more likely to win many more medals than in the past?

Jack Straw: Yes, to the first part of the question, and I hope so, to the second.

DELEGATED LEGISLATION

Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),

Environmental Protection

That the draft Offshore Petroleum Activities (Oil Pollution Prevention and Control) Regulations 2005, which were laid before this House on 17th March, in the last Session of Parliament, be approved.[Mr. Alan Campbell.]
	Question agreed to.
	Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),

Northern Ireland

That the draft Colleges of Education (Northern Ireland) Order 2005, which was laid before this House on 28th June, be approved.[Mr. Alan Campbell.]
	Question agreed to.

PETITION
	  
	Make Poverty History

John McDonnell: Mr. Speaker, you have taken a personal interest in promoting the engagement of young people in the democratic process, so you will be pleased, as I am pleased and very proud, that I am able to present a petition drafted by the pupils of Dr. Triplett's primary school in my constituency of Hayes and Harlington. The pupils of class 3T, with their teacher Miss Caroline Thomas, this month discussed the Make Poverty History campaign, drafted the petition and went into their playground and secured the signatures of parents, teachers and others.
	The petition of the staff, pupils and parents of Dr. Triplett's primary school, Hayes,
	Declares that this week the members of the G8 have the opportunity to make poverty history by delivering crucial changes on trade justice, debt and aid.
	The Petitioners therefore request that the House of Commons urge the Prime Minister to use his unique position and influence as G8 host to change the unjust rules of trade, cancel all the debt of all the poorest countries that need it and deliver at least $50 billion more in aid each year starting now, and make it work better for people in poverty.
	And the Petitioners remain, etc.
	To lie upon the Table.

NHS (LINCOLNSHIRE)

Motion made, and Question proposed, That this House do now adjourn.[Mr. Alan Campbell.]

Mark Simmonds: I am delighted to have secured this important Adjournment debate on Lincolnshire's national health service at a time when a vital range of services and facilities across the county appear to be under threat as a result of cost-cutting measures necessitated by a funding shortfall.
	The United Lincolnshire Hospitals NHS Trust is one of the largest hospital trusts in the country and serves approximately 641,000 people. Last year, the trust treated 175,000 accident and emergency patients, 500,000 out-patients and nearly 100,000 in-patients. The trust provides a comprehensive range of hospital-based medical, surgical, paediatric, obstetric and gynaecological services from nine hospitals across Lincolnshire, two of which are in my constituency.
	Pilgrim hospital in Boston is a large district general hospital, with a 24-hour major A and E department and a range of specialities. The other hospital in my constituency is the Skegness and district hospital, which is a 39-bed community hospital with a 24-hour A and E department that deals not only with local residents but with a high tourist influx throughout the whole year. The two hospitals treat about 73,000 A and E cases and 150,000 out-patients each year. The East Lincolnshire primary care trust, which covers my constituency and the other eastern part of Lincolnshire, caters for 275,000 residents of east Lincolnshire, providing a range of services including GP services, dental services, community pharmacy services and community nursing services.
	I requested today's important debate as it has been announced that, across Lincolnshire, approximately 300 health service jobs are under threat, and five wards may be closedone at Grantham and district hospital, two at Lincoln City hospital, and two at Pilgrim hospital in Boston in my constituency. In addition, up to three surgical wards will become day-case or short-stay wards. These proposals are understandably causing significant angst both in my constituency and elsewhere in Lincolnshire.
	The Lincolnshire health service is already struggling to cope, and I fear, along with many people working within Lincolnshire's NHS, that these cutbacks would have a profound effect on the provision of local health care available to my constituents and the other people who reside in Lincolnshire. Staff at Pilgrim and Skegness hospitals, as well as health care workers and professionals across the county, are working tirelessly to provide the best possible service under challenging circumstances and conditions, and I would like to take this opportunity formally to thank them for all their hard work. Unfortunately, health care professionals and local residents across Lincolnshire fear that the provision of health care will suffer if jobs are lost and hospital wards are to close.
	The exponential growth of Lincolnshire's population has put great strains on public services such as the NHS. From 1991 to 2001 Lincolnshire's population increased by 10 per cent. compared with the national average of 2.7 per cent. This is a significantand, I believe, unrecognisedincrease. The figure includes not only people retiring to Lincolnshire from the midlands, as they have done traditionally, but those moving to Lincolnshire from the south of England to take advantage of the significantly disparate house prices. The problems facing Lincolnshire's national health service are different from those in many other areas. Our county covers a comparably large and predominantly rural area, we have no motorways, and our public transport system is limited.
	As well as a growing population, we have an ageing population. Some 22 per cent. of the population of east Lincolnshire is over 65, compared with 16 per cent. of the total UK population. Additionally, there is a considerable seasonal influx of tourists to the east Lincolnshire coast. There are significant pockets of socio-economic deprivation and a transient population who often work in the low-wage, low-skill agricultural and seaside economic sectors. All those factors mean that our community is heavily reliant on the local NHS sector, but the Government have failed to recognise Lincolnshire's specific needs and have thus underfunded the primary care trust and hospital trust, which has resulted in the situation that we face today.
	Those factors have put added pressures and strains on Lincolnshire's national health service, but the service has received inadequate funding from central Government to maintain and expand its facilities. As a result, the NHS in Lincolnshire reported an 8.1 million deficit for 200405 and faces a 20 million shortfall in 200506. The United Lincolnshire hospitals trust and the East Lincolnshire PCT have considered ways of balancing their budgets and eliminating the shortfall, but have unfortunately concluded that they have no alternative but to make cutbacks to front-line services. I warned the House in a debate on 16 January 2003 that Lincolnshire's health service was in financial difficulty. Indeed, I cited the example of the West Lincolnshire primary care trust, which at the time had run out of money for that financial year and subsequently had to cancel many surgical operations.
	During the 200405 financial year, the East Lincolnshire primary care trust had a specific shortfall of 4.5 million against an estimated revenue allocation level below the national average of 12 million a year. Finallyat lastthe Government have recognised their consistently inadequate and unfair funding of Lincolnshire's primary care trusts and recently announced significant increases from April 2006. East Lincolnshire PCT will receive an increase of 13.6 per cent. in 200607 and of 12.4 per cent. in 200708. The requisite figures for the West Lincolnshire primary care trust are 9.5 per cent. and 10.5 per cent., and the figures for the Lincolnshire South West Teaching primary care trust are 9.1 per cent. and 10.3 per cent. Although that additional money is welcome, it will arrive too late to stop the cuts that are being talked about at the moment. I shall come back to what I believe should be done later.
	It is important to put on record the interrelationship between primary care trusts and hospital trusts, because the underfunding of Lincolnshire's PCTs has a severe knock-on impact. The primary trusts have allegedly failed to fund adequately out-of-hours and GP services, so patients go to hospitals directly, unnecessarily, or via inappropriate referrals. As there is little provision to transfer patients out into the community, significant numbers of people are occupying surgical and medical beds. At Pilgrim hospital in Boston alone, 10 per cent. of the beds are occupied by people who should and could be in the community, rather than in acute beds. That happens for a variety of reasons, such as delayed discharges and because people are waiting for intermediate care, waiting to go to other, already full, hospitals or waiting for rehabilitation in the community. I accept and support the fact that there is an urgent necessity to increase community care facilities, such as emergency care practitioners and specialist nurses, and for investment in intermediary care facilities. Such facilities are not there today.
	I cannot fathom how closing five wards throughout Lincolnshire, including two in Pilgrim hospital in my constituency, which amounts to 58 beds, will improve the situation. It is inexplicable. Indeed, a recent hospital trust press release highlights an existing significant shortage of beds that puts pressure on A and E services. It says:
	much of the pressure experienced in A  E is due to emergency admission patients waiting for beds.
	The beds are not there.
	In addition, there are concerns about the out-of-hours service across the country, and Lincolnshire is no exception. Although I recognise that the scheme may allow doctors to spend more time in their surgeries rather than driving long distances in the evening and the early morning, there are fears that the out-of-hours new practice is undermining GPs' contracts and contacts with the community.
	Some GPs in Lincolnshire fear that the new system may even be dangerous, putting patients' health and safety at risk as a result of inadequate funding allocated to the new scheme. Only last month, the independent Healthcare Commission was asked to look into East Lincolnshire PCT's out-of-hours service, following specific GP criticism. Once initial inquiries are completed, the commission will decide whether it needs to press ahead with a formal investigation. I await, as my constituents do, its decision with interest.
	I have one final issue to tacklethe new consultant contract. Sold as a plan to improve service provision by rewarding consultants fairly for all activities undertaken, it was poorly resourced from the outset. Indeed, it has achieved the inverse of the original objective. There is now a drive to curtail consultant activity down to a base level to save money by reducing consultant pay. That is inevitably having a detrimental impact on patient care and was a significant contributory factor to the shortfall within the United Lincolnshire hospitals trust. It is incredible that the Department of Health, as well as the strategic health authority, failed to foresee the problem.
	In conclusion, will the Minister assess the viability of allowing the primary care trust to draw down money from next year to fund the wards at Pilgrim hospital as intermediate care wards so that no beds are lost, so that there is no diminution of service for my constituents and other Lincolnshire residents who use Pilgrim hospital, and so that the primary care trust has a facility within Pilgrim hospital to take the patients out of acute and medical wards? That would free them up and ensure that there is no impact on other essential services in Pilgrim and other hospitals across Lincolnshire.
	The Government of course blame the funding shortfalls on those working in the NHS. Will the Minister therefore explain why, if, as the Secretary of State stated on the Today programme, the funding shortfalls are all a mistake of the managers in the NHS, there have been no resignations by those responsible for the mismanagement? I am not talking just about Lincolnshire, because the problem is becoming prevalent in hospital trusts across the country.
	The proposals to cut services and jobs in Lincolnshire's NHS are of significant concern not just to those who use the NHS, but to those who work in it. They will have a detrimental impact on health care provision and a negative impact on morale, and will exacerbate recruitment problems, which the Minister will realise are already serious in much of Lincolnshire. As a result of bed shortages, it may put routine and regular surgery at risk without community care facilities in place first. The Government were warned, but they failed to act in time to stop those cuts. The people in Lincolnshire now hope that they can take action to stop the ward closures and the talked-about job cuts.

Liam Byrne: I sincerely congratulate the hon. Member for Boston and Skegness (Mark Simmonds) on securing the debate and providing such a thorough analysis. He takes a keen interest in health issues in Boston and Skegness, and on 22 June he raised financial matters in Lincolnshire in private office correspondence with my right hon. Friend the Secretary of State for Health. I also congratulate my hon. Friend the Member for Lincoln (Gillian Merron), who has also raised health issues in the region with my Department. I know that she has discussed the matters at the heart of the debate with local bodies responsible for budgetary decisions.
	I hope that the hon. Gentleman will indulge me as I briefly sketch out the backdrop to the debate. We are halfway through a 10-year plan to transform the NHS, turning it from the creaking service that we inherited in 1997 into a well resourced, patient-centred service that is fit for purpose in the 21st century. We are therefore introducing national standards, which, over time, will set out the entitlement to health care for residents, including the constituents of the hon. Member for Boston and Skegness. Those standards are backed by a tripling of health investment to 90 billion a year in the next few years. The changes are already delivering record falls in deaths from coronary heart disease and from cancer, and in the number of suicides. I pay tribute to the staff throughout the national health service for their work in securing those achievements.
	The hon. Gentleman was concerned about the risk to services. I noticed in the Lincolnshire papers that I perused in preparation for tonight's debate some of the changes that are taking place in Lincolnshire and Lincoln. I was delighted to read of the outstanding performance of the accident and emergency department at United Lincolnshire Hospitals NHS Trust, which the hon. Gentleman mentioned. That department consistently sees 97 per cent. of A and E patients within four hours, which is a far cry from the days when people had to take a sleeping bag to A and E. Its performance is so good that it was awarded a special performance bonus of 100,000. I was delighted to read of the opening at Lincoln county hospital of 4.25 million-worth of specialist wards for elderly care and of a new stroke unit, which was opened by the Princess Royal. I was impressed by an innovative new schemethe first in the countrydevised by Lincolnshire Ambulance and Health Transport Service NHS Trust designed to alert the A and E department of patient details before the patient arrives. All those innovations were made possible by new investment.
	The purpose of tonight's debate, however, is to discuss not what has been achieved so far but what needs to be better. At the heart of our deliberations this evening is the question of money. Lincolnshire is abeautiful county, and the hon. Gentleman's constituency is a beautiful place. I am a great fan of its church architecture in particular. The delivery of health care in Lincolnshire carries challenges which, while not unique, are rare. First, there is the demographic challenge, to which the hon. Gentleman alerted the House, particularly in the east Lincolnshire coastal area. Between 1999 and 2004, population growth peaked at 25 per cent. in the 57-year-old age group. As the hon. Gentleman mentioned, postcode analysis demonstrates that the majority of those people were relocating to east Lincolnshire from the former industrial areas of Nottingham, Leicestershire and south Yorkshire, with associated high levels of long-term conditions and health needs, which are reflected in mortality figures that are higher than those for the indigenous population. The rural nature of the county is also a factor. The cost of provider services in Lincolnshire partly reflects the complexities of delivering health services to a dispersed population. For example, the United Lincolnshire Hospitals NHS Trust runs five A and E departments, which serve a population of about 640,000 people with over an hour's drive time between individual sites.
	To remedy that problem, the Government have introduced a new system of funding for local health care, which first creates a baseline of what local need looks like and, secondly, sets out a plan for increasing funding in different places to meet that baseline. That involves significant change for the hon. Gentleman's primary care trust, and I am grateful that he has recognised that. From 200304 to 200506, there is an increase of about 67 million, and in the next couple of years, there will be an increase of 87.5 million, making a total of 154 million by 200708. That should go a considerable way towards allaying concerns about change. That 154 million boost is not under-recognition, and it will have a major impact on our ability to finance innovations such as the new contract for consultants. We have always made it clear, however, that where there is new investment there must be reform. Central to reform in Lincolnshire is action to tackle the deficits in local health budgets, and I think that the hon. Gentleman made an excellent job of laying those out to the House. I would go slightly further and say that if no further action is taken and there is no reform ahead, the local health community forecasts that overspending this year will rise to about 13 million by the end of March 2006.
	I am glad to hear that the reform required to accompany the extra 154 million investment now appears to be in hand. Central to that is ensuring that best practice in the rest of the country arrives in the hon. Gentleman's constituency. It is clear, and it is accepted by local management, that the NHS in Lincolnshire has not moved far enough or fast enough in modernising service delivery. While there are pockets of excellent practice, too many services are still provided along a traditional model. In particular, far too many patients are transported and admitted to hospital, and once there they spend too long in an acute care setting.
	Change in practice needs to be considered carefully, but the achievements to date should provide some measure of comfort. The hon. Gentleman said that the changes proposed were inexplicable, so I shall try to shed a little light on them. Over the past year, for example, United Lincolnshire Hospitals Trust has improved patient pathways across primary care, acute care and social services, enabling the average length of stay to be reduced from 7.9 days in 200304 to just 6.7 days in 200405. That is an 18 per cent. improvement in just a couple of years, which has allowed the trust to reduce its overall bed stock by 110 or 8.8 per cent. to 1,141 across all sites.
	Crucially, that has been achieved without reducing the levels of service provision or activity at any of the sites operated by the trust. In fact, quite the oppositeover the same period the local health community succeeded in reducing the maximum in-patient waiting time not for one specialty, but for all specialties, including orthopaedics, to six months by April 2005, significantly ahead of the national target, which was December 2005.
	Over the next year, 200506, the combined effect of a 5 per cent. reduction in emergency admissions, equivalent to seven patients per day across the whole of Lincolnshire, and a continued reduction in the length of stay to an average of 5.5 days, which is national best practice, will enable a further 143 beds to become free. Let me be clear: the reduction in bed numbers will not reduce local people's access to health services. If there are ward closures, they will be general wards and will therefore not result in the closure of any local specialties.
	I want to go slightly further tonight and reassure the hon. Gentleman that reducing surplus beds does not form part of any current plans to reconfigure the status of individual sites. The only services that will be moving this year from Boston Pilgrim to Lincoln County are those being centralised in order to comply with guidance from the National Institute for Health and Clinical Excellence, particularly in respect of Improving Outcomes guidance for cancer services.
	The response to the challenges that the hon. Gentleman sketched out are measures rooted in local consultation. The direction of travel, I understand, for local health service redesign in Lincolnshire was set out in two key local health community documents. The first was the Lincolnshire acute services strategy, which was developed and formally consulted on during the summer of 2003. Local community stakeholders, including expert patients, were involved in preparing the proposals. Consultation with patients was undertaken in the Boston locality to help develop the plans.
	Secondly, all six NHS organisations in Lincolnshire, together with the county council, have developed a 10-year Lincolnshire health and social care strategic framework. That sets out the acute services strategy in a wider context and has been endorsed by all the trust boards. It was formally signed off in March 2005 by the Lincolnshire health and social care partnership board, which includes a cabinet member from Lincolnshire county council.
	Beyond that, the path to balance is set out in the new community-wide financial recovery plan developed in partnership with the county council, among others. Change, of course, is difficult, but ultimately every community must decide what shape its local health service needs to take in order to deliver the standards that are set out nationally. There is a measure of cross-party consensus on this. It was the hon. Member for South Cambridgeshire (Mr. Lansley) who recently thundered to an audience that
	we will stop trying to run the day-to-day health service from the desks of Whitehall.
	I agree with him up to this point: that the NHS should not be micro-managed from Whitehall. The role of Health Ministers and the Department of Health is to secure adequate resources and to set out a strategic framework for the NHS to work within. It is right and proper that the decisions on prioritisation are taken locally, and we have put decision making where it needs to bein the hands of the local NHS.
	The quid pro quo, however, is that if we are to run services locally there must be local engagement and consultation. I understand that that is now happening. First, the local health community is working collectively and with partners to finalise the NHS financial recovery plan. Following a presentation of the emerging proposals to the Lincolnshire health and social care overview and scrutiny committee yesterday, a revised submission will be made to the SHA on 15 July. Secondly, the SHA has scheduled individual monthly progress meetings with the chief executives of East Lincolnshire PCT and United Lincolnshire Hospitals Trust, as well as a monthly review meeting with the chief executive of West Lincolnshire PCT to monitor cross-organisational actions. Thirdly, exceptional board-to-board meetings led by the chair and chief executive of the SHA have been arranged with the   United Lincolnshire Hospitals Trust and East Lincolnshire PCT for 8 and 14 July respectively.
	In summary, this is about the delivery of local services. We have increased funding for primary care trusts very significantly. It is now for PCTs to decide on their local priorities. All NHS organisationsI am sure that the hon. Gentleman would not demur from this ambitionmust live within the resources that they are allocated. Although that may mean some service change, the overall direction of travel is towards investment in improving the NHS locally and nationally. That is changing the health and well-being of people in this country, including the hon. Gentleman's constituents.
	Question put and agreed to.
	Adjourned accordingly at twenty-one minutes past Eight o'clock.